Court Opinion

ID: 5195858
Source: CourtListenerOpinion
Date Created: 2022-01-06 15:43:08.086799+00
Date Added: 2024-06-11T08:27:03.750864
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 non-resident has its situs at the domicile *383of the creditor, and although the same was due and payable in this State it does not constitute property within this State (Matter of Bronson, 150 N. Y. 1); 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 non-resident 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 the 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) 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 he said: “ If the transfer of the deposit necessarily depends upon and involves the law of Hew York for its exercise, or, in other words, if the transfer is subject to the power of the State of Hew York, then Hew York may subject the transfer to a tax. * * - But it is plain that the transfer does depend upon the law of Hew 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 1 Hothing but the fact that the law of the place where the debtor is will make him pay. * * * Bower over the person of the debtor confers jurisdiction, we repeat. And this being so, we perceive no better reason for denying, the right of Hew 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 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 *384Gray there says: “ The decedent was a creditor to whom, tlie obligors in the various bonds were indebted; the extent and terms of whose obligation 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 non-residents’ estates are concerned, to cases of property liaving-a tangible and visible existence, and being the actual subject of the ownership.” In Matter of Houdayer (150 N. Y. 37), decided' at the same time as the Bronson case, the court held that a deposit of money iii a bank, though technically a debt, is money for all practical purposes, and as subh is taxable under the Transfer Tax Law.
Applying the principles established by these cases, it seems to mé 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 fhe time of his death his money. The debtor still owed the decedent the amount of indebtedness, and'if lie 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 Flower & Co. was'not a deposit in-a bank or trust company subject to the order 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 beén 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 a 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 *385account 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 ¡non-resident 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.
Order reversed, with ten dollars costs and disbursements, and anotion granted.