BEIDLER ET AL. v. SOUTH CAROLINA TAX COMMISSION
12212
Supreme Court of South Carolina
May 27, 1927
160 S. E., 264
The rule appears to be that, where an indictment contains counts which may properly be joined in the same indictment, the better practice is to direct the jury to pass in their verdict upon each count; but, if not, to instruct them explicitly upon the effect of a general verdict of guilty which appears to comply with the approved practice. See, also, State v. Burbage, 51 S. C. 284, 28 S. E. 937; State v. Sheppard, 54 S. C., 178, 32 S. E., 146; State v. Norris, 65 S. C., 287, 43 S. E., 791; State v. Rountree, 80 S. C., 388, 61 S. E., 1072, 22 L. R. A. (N. S.) 833; State v. Bolyn, 143 S. C., 63, 141 S. E. 165; 27 R. C. L. 856; State v. Johnson, 75 N. C., 123, 22 Am. Rep. 666.
I think therefore that the judgment should be reversed and a new trial ordered.
MR. JUSTICE BONHAM concurs in proposed result.
Messrs. John M. Daniel, Attorney General, J. Fraser Lyon and N. A. Turner, for respondent.
The opinion of the Court was delivered by MR. C. J. RAMAGE, Acting Associate Justice.
This is an appeal from the decision of South Carolina Tax Commission imposing an inheritance tax on certain assets of the estate of Francis Beidler, deceased.
On March 4, 1924, Francis Beidler, a resident of Chicago, in the State of Illinois, died in said State, leaving of force his last will and testament, which was duly probated in the Probate Court of Cook County, Ill., and Francis Beidler, II, and George Engelking thereafter duly qualified and are now acting as executors of said estate. At the time of his death, the said decedent owned, among other personal property, the following, as to which an inheritance tax has been assessed by the South Carolina Tax Commission, to wit: 8,000 shares of the capital stock of Santee River Cypress Lumber Company, a South Carolina corporation, which, by agreement reached between the tax commission and the attorneys for the executors has been valued for the purpose of the assessment of the South Carolina inheritance tax at $204.00 per share, or $1,632,000.00. The balance of the stock in said lumber company is owned by the widow and children of the decedent, Mrs. Elizabeth Beidler, owning 2,000 shares, Francis Beidler, II, 2,500 shares, and Elizabeth Beidler, Jr., 2,500 shares.
In addition thereto, said Santee River Cypress Lumber Company was indebted to the decedent at the time of his death in the sum of $556,864.22, for advances theretofore made by him to said company, and in the sum of $64,672.00 for dividends previously declared by the said company on the shares of stock above described. Said indebtedness was an open unsecured book account, which was entered upon the books of the Santee River Cypress Lumber Company, kept at Eutawville, S. C. Mr. Beidler also kept a complete set of personal books in Chicago, upon which appear entries
The executors of the said estate filed with the South Carolina Tax Commission, as required by the Inheritance Tax Law of the State of South Carolina (
On July 25, 1925, the South Carolina Tax Commission levied an inheritance tax upon all of the above assets amounting to a tax of $144,106.10.
The executors filed with the tax commission Cahill‘s Revised Statutes of the State of Illinois, Paragraphs 10, 11, 12, 13, of Chapter 41 (see
The value of the estate outside of South Carolina has not been ascertained by the South Carolina Tax Commission, but, for the purpose of this appeal, it is agreed that it was large and valuable, probably approximating $1,000,000.00
The following are the issues:
1. Are the items above referred to, of $556,864.22 and $64,672.00, taxable herein?
3. Are the executors entitled to an exemption, in favor of the Francis Beidler charitable trust fund, of $6,000.00 or only $200.00?
4. Does 10 per cent. interest on the South Carolina inheritance tax start to run on July 31, 1925, or on January 28, 1926?
We shall now consider the first question as to the tax on the debt and on the dividends. First as to the debt: “Upon the other hand, it is very generally held in this country, unless the terms of the statute forbid, that a succession or inheritance tax is payable in respect of the personal property belonging to the estate of a nonresident decedent, where such property, or the evidence thereof, is physically present within the taxing state, at least, if not there for a mere temporary presence.” Note to 46 L. R. A. (N. S.), at page 1168, citing Blackstone v. Miller, 188 U. S., 189, 23 S. Ct., 277, 47 L. Ed., 439, and Gallup‘s Appeal, 76 Conn., 617, 57 A., 699, and other cases.
“Bonds of a foreign corporation, as well as bonds and certificates of stock of domestic corporations, when deposited in a safe-deposit vault within the State, although owned by a nonresident, are ‘property within the State,’ within the meaning of the transfer tax Act of 1892.” In re Estate of Whiting, 150 N. Y., 27, 44 N. E., 715, 34 L. R. A., 232, 55 Am. St. Rep., 640.
“Money of a nonresident, deposited by him in a bank within the State, although commingled with trust funds in an account opened by him as trustee, constitutes ‘property within the State,’ within the meaning of the New York transfer tax Act of 1892, which includes property of a nonresident decedent if within the State.” In re Estate of Houdayer (Deed), 150 N. Y., 37, 44 N. E., 718, 34 L. R. A., 235, 55 Am. St. Rep., 642.
Thus the Legislature intended to repeal the maxim, “Mobilia personam sequuntur,” so far as it was an obstacle.
“The words ‘being in this State’ in the statute imposing a collateral inheritance tax upon ‘all assets * * * of every kind, passing from any person who may die seized and possessed thereof, being in this State,’ refer to the property and not to the person; and property actually within the State, although for other purposes it may be treated as constructively elsewhere because of the owner‘s nonresidence is subject to the tax.” State v. Dalrymple, 70 Md., 294, 17 A., 82, 3 L. R. A., 372.
We herewith submit some quotations from the case that really determines this appeal, Blackstone v. Miller, 188 U. S., 189, 23 S. Ct., 277, 47 L. Ed., 439:
“A State may tax the transfer, under the will of a nonresident of debts due the decedent by its citizens. The im-
“The property consisted of a debt of $10,092.24, due to the deceased by a firm, and of the net sum of $4,843,456.72, held on a deposit account by the United States Trust Company of New York. * * * In view of the State decisions it must be assumed that the New York statute is intended to reach the transfer of this property if it can be reached. * * * The domicil, naturally, must control a succession of that kind. Universal succession is the artificial continuance of the person of a deceased by an executor, heir, or the like, so far as succession to rights and obligations is concerned. It is a fiction, the historical origin of which is familiar to scholars, and it is this fiction that gives whatever meaning it has to the saying mobilia sequuntur personam. But being a fiction it is not allowed to obscure the facts, when the facts become important. * * * 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. The principle has been recognized by this Court with regard to garnishments of a domestic debtor of an absent defendant. * * * What gives the debt validity? Nothing but the fact that the law of the place where the debtor is will make him pay. It does not matter that the law would not need to be invoked in the particular case. Most of us do not commit crimes, yet we nevertheless are subject to the criminal law, and it affords one of the motives for our conduct. So, again, what enables any other
The following quotations are from L. R. A., 1916-A, page 895, et seq.:
“The State Court (Re Blackstone [1902], 69 App. Div., 127, 74 N. Y. S., 508, affirmed without opinion in 171 N. Y., 682, 64 N. E., 1118), in holding that the deposits represented ‘property within the State’ within the New York statute then in force. * * *
“That the New York cases cited in the note in 46 L. R. A. (N. S.), 1168 et seq., holding that debts due to estates of nonresidents were subject to a succession tax, did not turn upon the residence of the debtor, but rather upon the physical presence within the State of the evidences of the property, is apparent from the discussion in those cases. The point is clearly illustrated in Re Tiffany (1911), 143 App. Div., 327, 128 N. Y. S., 106, affirmed in 202 N. Y., 550 [95 N. E., 1140], which is affirmed [Wheeler v. Sohmer] in 233 U. S., 434, 34 S. Ct., 607, 58 L. Ed., 1030, holding that notes belonging to a nonresident testator, some made by residents of New York, and others by nonresidents, were subject to the payment of the tax because at the time of the owner‘s death, and for some time prior thereto, they were kept in a safe deposit box in New York, the Court observing at the close of the opinion that it is possible that the two
Dodge County v. Burns, 89 Neb., 534, 131 N. W., 922, 35 L. R. A. (N. S.), 877, seems to hold that simple debts were different from an indebtedness represented by a paper writing held in another State, on the ground that simple debts would support an administration of the estate of the nonresident.
The Court says in discussing the case: “It was held otherwise by the Court of Appeals of Maryland in State v. Dalrymple, 70 Md., 294 [17 A., 82], 3 L. R. A., 372, where the words ‘being in this State’ were declared to refer to the actual, and not to the constructive, situation of the property. In Alvany v. Powell, 2 Jones, Eq. [55 N. C.], 51, it was held that property, whether real or personal, situate in the State of North Carolina, but belonging to one domiciled and dying intestate in Canada, was subject to the succession tax imposed by a statute of said State. * * * Where, however, the money of a nonresident is invested in this State, as it was by Mr. Romaine in the bond and mortgage in question, and in the deposits made by him in the savings banks, or where the property of a nonresident is habitually kept even for safety, in this State, we think that the statute applies both in letter and spirit. Such property is within this State in every reasonable sense, receives the protection of its laws, and has every advantage from government, for the support of which taxes are laid, that it would have if it belonged to a resident. We think that a fair construction of the Act permits no distinction as to such property, based simply upon the residence of the deceased owner.”
In Wheeler v. Sohmer, 233 U. S., 434, 34 S. Ct., 607, 58 L. Ed., 1030, it was held that the State of New York could, by proper law to that effect, tax the transfer of notes in a safe deposit box in New York though the notes were made either by a resident of Chicago, secured by mortgages of Chicago lands to trustees in Illinois, or by a Virginia corporation.
We refer to the entire note found in 4 L. R. A. (N. S.) found on pages 953, 954, 955, as bearing on the question of the location of funds in a State as a business situs and which are under the jurisdiction of the State for the purposes of taxation, though the owner lives in another State.
The case of Chicago, R. I. & P. R. Co. v. Sturm, 174 U. S., 710, 19 S. Ct., 797, 43 L. Ed., 1144, holds: “A debt may be attached at the domicile of the debtor, though the creditor‘s domicile is in another State.”
We think it may be safely said that this is the general law. The Beidler estate depends upon the laws of South Carolina and our Court to protect this debt. The Tax Commission found this debt here, and there is no legal or proper showing made that the debt has ever been anywhere else;
In addition to the debt having an actual situs in South Carolina, the debt and dividend in question also had what is termed a “business situs” in this State. Both the debt and dividend were involved in the assets of Santee River Cypress Lumber Company; they were a part of its working capital and were no doubt left with the debtor company (in which Mr. Beidler was vitally interested and which he and his family owned in toto), to help and assist it along in its business. He was tremendously interested in the affairs of the large and extensive corporation, and was no doubt cheerfully willing to leave these two large amounts invested here to help make dividends for the company. But whatever his motive, the two amounts in question were here, and that is the end of the matter so far as we are concerned. It was being used by the company and was invested by it and was a part of it and allowed to remain so by Beidler himself who fixed its status. The Court cannot shut its eyes to the plain facts of this case, and their evident relations, so far as the real parties at interest are concerned. All of the debt was involved and the property invested in South Carolina.
To use the language of the Blackstone case, the State has “power over the person of the debtor” and “power over the person of the debtor confers jurisdiction.”
The main question in this appeal is whether the Beidler estate is liable to the State for an inheritance tax upon a debt of $556,864.22, which the Santee River Cypress Lumber Company, a South Carolina corporation doing business near Eutawville, S. C., owed to Francis Beidler, a citizen of Chicago, at the time of his death, March 4, 1924. The debt was for advances in cash made by Beidler to the corporation, in which he and his family owned the entire capital stock. A similar question has arisen with reference to a claim of $64,672.00, the amount of dividends which had been declared upon Beidler‘s stock, but which had not been paid.
We do not see how there can be but one result from the application of this test. The debt was due by a South Carolina corporation doing business in this State; it was an asset of the decedent‘s estate at the domicile of the debtor, the South Carolina corporation; the title to the claim did not vest in the representatives of the decedent‘s estate until ancillary administration had been taken out in this State; recourse to the Courts and laws of South Carolina was therefore indispensable “to make effectual the disposition of the property authorized by the law of the domicile.”
We do not think that there can be any doubt as to the proposition that the voluntary payment of the debt by the South Carolina corporation to the Beidler executors in Chicago would have been in order, without the appointment of an ancillary administrator in South Carolina; that their acquittance would have been a complete protection to the
“The general rule of law is well settled that for the purpose of founding administration, all simple contract debts are assets at the domicile of the debtor; and that the locality of such a debt for this purpose is not affected by a bill of exchange or promissory note having been given for it, because the bill or note does not alter the nature of the debt, but is merely evidence of it, and therefore the debt is assets where the debtor lives, without regard to the place where the instrument is found or payable.” Wyman v. Halstead, 109 U. S., 654, 3 S. Ct., 417, 418, 27 L. Ed., 1068. See, also, to the same effect, Dial v. Gary, 14 S. C., 573, 37 Am. Rep., 737.
If then this be true, where is the title to the local assets? In Stoddard v. Aiken, 57 S. C., 134, 35 S. E., 501, the plaintiffs had qualified as executors of the will of a Georgia citizen, in Georgia; they brought suit in Barnwell County, this State, upon a note given by Aiken, a resident of Barnwell County, to their testator. The Court held that, as the executors rested their title to the note, and their right to maintain the action upon the appointment as executors by the Court of Georgia, which had no effect in this State, their complaint should be dismissed.
In Heyward v. Williams, 57 S. C., 235, 35 S. E., 503, 505, the action was by the plaintiff, as assignee of a note and mortgage upon land in Beaufort County, executed by the
In Dial v. Gary, 14 S. C., 573, 37 Am. Rep., 737, the action was by the plaintiff, as assignee of a note and mortgage upon land in Richland County, executed by the defendant Gary to one Burke, a citizen of Massachusetts, whose administrator, qualified there, had assigned the note and mortgage to the plaintiff Dial. Upon demurrer to the complaint, the Court held that the assignment was invalid for want of title to the note and mortgage in the administrator saying: “Now if the administrator of Asa Burke, appointed in Massachusetts, his domicile, had brought these actions, can there be a doubt that a demurrer would have been fatal? Or, if the property in question was movable, tangible property, such as horses, cattle, wares and merchan-
The Court cites with evident approval the case of Stevens v. Gaylord, 11 Mass., 263, in which the Court held:
“If a foreigner, or a citizen of any other of the United States dies, leaving debts and effects in this State, these can never be collected by an administrator appointed in the place of his domicil.” In that case the debtor had come into the state of the decedent‘s domicile and was personally served. The Court held that that did not affect the principle announced; and our Court commenting:
“This must have been upon the ground that the administration in Massachusetts does not give title, even in that State, to notes and other choses in action of deceased parties dying there, on persons in other states.”
There the bond and mortgage were physically in possession of the administrator in Massachusetts. See, also, Patterson v. Pagan, 18 S. C., 584; Cochran v. Fillans, 20 S. C., 237; Graveley v. Graveley, 25 S. C., 1, 60 Am. Rep., 478; Stevens v. Dunlap, 33 S. C., 350, 11 S. E., 1017; Jones v. Jones, 39 S. C., 247, 17 S. E., 587, 802; Pollock v. Association, 48 S. C., 65, 25 S. E., 977, 59 Am. St. Rep.; 695; Ayres v. Des Portes, 56 S. C., 544, 35 S. E., 218; In re Estate of Mayo, 60 S. C., 402, 38 S. E., 634, 54 L. R. A., 660; Bank v. Tax Com., 133 S. C., 406, 131 S. E., 142.
So it appears manifest that the debts in question are assets of the decedent‘s estate to be assembled and distrib-
In Liverpool & London & Globe Ins. Co. of New York v. Orleans Assessors, 221 U. S., 346, 31 S. Ct., 550, 553, 55 L. Ed., 762, L. R. A., 1915C, 903, there was involved the power of a state to tax premiums of insurance due by the residents to a nonresident insurance company, not evidenced by a written instrument. The company contended that a tax upon incorporeal things, such as abstract credits, not in concrete form and without tangible shape, violate the Fourteenth Amendment. The Court said: “The asserted distinction cannot be maintained. When it is said that intangible property, such as credits on open account, have their situs at the creditor‘s domicil, the metaphor does not aid. Being incorporeal, they can have no actual situs. But they constitute property; as such they must be regarded as taxable, and the question is one of jurisdiction. The legal fiction expressed in the maxim mobilia sequuntur personam yields to the fact of actual control elsewhere. And in the case of credits, though intangible, arising as did those in the present instance, the control adequate to confer jurisdiction may be found in the sovereignty of the debtor‘s domicil.
The Court further stated: “Equally, then, had the state the power to tax the premium accounts here involved. They were not withdrawn from its constitutional authority, either by reason of the fact that they were payable in consideration of insurance, instead of loans or goods sold, or by the circumstance that the credits were not evidenced by written instruments. They were none the less enforceable credits arising in the local business.”
It appears to us that the case of Blackstone v. Miller, 188 U. S., 189, 23 S. Ct., 277, 47 L. Ed., 439, is conclusive of the question. In that case Blackstone, the testator, died domiciled in Illinois. Under a statutory provision practically identical with ours, the State of New York levied a succession tax on a debt due the deceased by a New York firm and on a sum of money held on a deposit account to the credit of the deceased by a New York Trust Company. The debt was some $10,000; the deposit over $4,000,000. The Court in its decision appears to have lost sight of the insignificant (?) debt compared with the deposit, and directed its at-
In this discussion we have not considered the amendment of 1925 (
But it is insisted by the appellants that the question is concluded by the decision in the Fuller case, which holds that, where it appears that ancillary administration, or a resort in other form to the laws of this state to compel recognition of the transferees (executors) title, cannot be compelled in order to accomplish in fact the transfer authorized by the law of the testator‘s domicile, the debts cannot be considered as “property within the State,” subject to the inheritance tax; and that, it appearing that the executors may proceed by attachment in another state, to collect the debts due by the domestic corporation to them, from a nonresident debtor of the domestic corporation, they come within the rule announced in the Fuller case.
It appears that under a contract between the Santee Company and the Brooklyn Cooperage Company, guaranteed by the American Sugar Refining Company, the Brooklyn Com
If the case falls within the rule announced in the Fuller case, there can be no doubt of the correctness of the appellants’ contention; but we do not think that it does. In the Fuller case the immunity was sustained upon the ground that the bondholders who held bonds executed and payable in New York, and physically in possession of the executors in that jurisdiction, could acquire jurisdiction of the person of the mortgagor by foreclosing the mortgage in North Carolina, where a part of the railroad was located; and that for that reason resort to the Courts or to the laws of South Carolina was unnecessary. The Court said: “The securities not being physically present in this State, no ancillary administration could be compelled for the purpose of reducing them to possession. The bonds and certificates were payable in New York, and the resident debtor could not require ancillary administration in this State as a condition of payment. In the contingency that it should be necessary for the trustee to foreclose the mortgage for the benefit of the bondholders, since the line of railway mortgaged lies in two states, resort could be had to the Courts of North Carolina to foreclose the mortgage and sell the line of railway as a whole.”
The situation in the case at bar is quite different. The claims in question, the debts due by the Santee Company to Beidler‘s estate, are not bonds or other securities having possibly a local situs at the domicile of the creditor, but are
As is said in the Blackstone Case: “Power over the person of the debtor confers jurisdiction.” The most that the executors could possibly have had, was power over certain property of the debtor, a proceeding in rem, which could not confer jurisdiction of the person.”
This is illustrated in the case of Bliss v. Bliss, 221 Mass., 201, 109 N. E., 148, L. R. A., 1916A, 889. There a partnership having places of business in New York and in Massachusetts, with property in each state, gave a note to one of the partners who resided in New York and kept the note there. After the death of the payer of the note, the Boston office issued a check in payment of the note and transmitted it to New York. The tax authorities in Massachusetts sought to impose an inheritance tax upon the transfer of the note. The Court held that it could not be done for the reason that the holder of the note could acquire jurisdiction of the person of the makers in New York and realize his judgment out of property there without having to resort to the Courts or laws of Massachusetts.
It seems clear, therefore, that as the executors of Beidler could not have acquired title to the debts without taking out ancillary administration in this State, and could not have acquired jurisdiction of the person of the domestic corporation by attachment outside of the state, resort to the Courts and laws of South Carolina was inevitable. These considerations, by the test declared in the Fuller case, conclude the question of the state‘s right to impose the inheritance tax.
In this connection we desire to call attention to the case of Baker v. Doe, 88 S. C., 69, 70 S. E., 431, 432, 34 L. R. A., (N. S.), 510, which, in our opinion, contains a manifest misapprehension of the law upon the subject of foreign attachments. In that case it is declared: “Another reason why there was error in refusing to vacate the warrant of attachment is that the debt was not attached at the domicile of the debtor.” This is clearly not the law as is demonstrated by the case from the Supreme Court of the United States which is cited and quoted from to sustain the proposition.
Appellant‘s attorneys in their lucid and able argument produced many authorities showing that the Courts of
As to the second issue: We think that this matter is settled by the able opinion of Judge Cothran, Associate Justice of this Court, in the case of Simmons v. Tax Commission, 134 S. C., 261, 132 S. E., 37. It seems that the precise point raised by this exception was before the Court in that case, and we are bound by it. That case clearly holds that, under the
For the reasons so well stated by respondent in its points and authorities, concerning the third question, the action of the Tax Commission is hereby affirmed.
As to the fourth issue, we think that the contention of the appellants should be sustained. The question is whether the 10 per cent. interest provided for by the act should begin to run from January 28, 1926, one year from the date of the qualification of the executors, or from July 31, 1925, one year from the date of the qualification of one Frank Stevenson as an ad interim administrator of the Beidler estate.
It appears that Beidler died on March 4, 1924; that the will was not probated in Chicago until January 28, 1925, at which time the executors qualified. In the meantime, pending the probate and qualifications, under an act of Illinois, under circumstances creating a delay, as detailed in the act, Stevenson was appointed administrator of the estate for the purpose of making an inventory, safely keeping the assets, collections, preservation, and administration as he might be directed by the Court, and turning the estate over to the executor or administrator when qualified. It does not appear that he did otherwise than collecting and preserving the assets, if even he went so far as that; no activities on his part with reference to carrying out the provisions of the will are shown, or that he received from the Court any directions in this respect. We think that under the circumstances he was nothing more than an ad interim custodian, without other power; and that the real administration began with the probate of the will and the qualification of the executors on January 28, 1925; that they had until January 28, 1926, to pay the tax, and that the 10 per cent. interest, in the nature of a penalty, did not begin to run until that date.
It is the judgment of this Court that the judgment and action of the Tax Commission as to the first and third questions be affirmed; that as to the second and fourth questions the appeal is sustained and the Tax Commission reversed, and that the matter be referred back to the Tax Commission for readjustment in conformity with the judgment of this Court herein expressed.
MR. CHIEF JUSTICE WATTS and MESSRS. JUSTICES COTHRAN, BLEASE and STABLER concur.
PER CURIAM
There were two motions argued before the Court in the above stated case at the January term:
(1) A motion by the appellants, upon the mandate of the Supreme Court of the United States and upon all other proceedings herein, to reverse the holding of the South Carolina Tax Commission in conformity with the opinion of the Supreme Court of the United States (282 U. S., 1, 51 S. Ct., 54, 75 L. Ed., 131), and to remand the matter to the Tax Commission solely for readjustment of the tax on the estate of Francis Beidler in conformity with said reversal;
(2) A motion by the respondent, South Carolina Tax Commission, to refer the case back to the Tax Commission to take testimony and make further investigation into the question whether the indebtedness of the Santee River Cypress Lumber Company to Francis Beidler had acquired a business situs for taxation within the State of South Carolina so as to be liable under the
The respondent had the opportunity to and did raise and argue the question before the Supreme Court of the United States which it now proposes to offer evi
Under this view of the case the appellants are entitled to the order for which they moved as above stated.
An answer to other questions proposed is unnecessary because of our conclusion that the judgment against the defendants cannot be sustained.
Judgment reversed.
It is so ordered.
MR. CHIEF JUSTICE BLEASE, MESSRS. JUSTICES COTHRAN, STABLER and CARTER and ACTING ASSOCIATE JUSTICE COSGROVE concur.
NOTE: For the information of the bar the opinion of the U. S. Supreme Court is herewith published:
MR. CHIEF JUSTICE HUGHES delivered the opinion of the Court:
On March 4, 1924, Francis Beidler, a resident of Chicago, Illinois, died in that State, leaving a will by which he bequeathed a portion of his personal property to his wife and children directly, and gave the residue in trust for their benefit and for charitable uses. The will was probated in Illinois, and Francis Beidler, II, and George Engelking, the appellants, qualified as executors.
The total amount of the indebtedness for advances and dividends, $621,536.22, was included by the attorney general of Illinois in the computation of the value of the decedent‘s estate for the purpose of fixing the inheritance tax payable to that state.
The executors filed with the South Carolina Tax Commission, as required by the
In reaching its conclusion as to the validity of the tax, the State Court relied chiefly upon the decision of this Court in Blackstone v. Miller, 188 U. S., 189, 47 L. Ed., 439, 23 S. Ct., 277. That decision has been overruled, and it is now established that the mere fact that the debtor is domiciled within the State does not give it jurisdiction to impose an inheritance or succession tax upon the transfer of the debt by a decedent who is domiciled in another state. Farmers Loan & T. Co. v. Minnesota, 280 U. S., 204, 74 L. Ed., 371, 65 A. L. R., 1000, 50 S. Ct., 98; Baldwin v. Missouri, 281 U. S., 586, 74 L. Ed., 1056, 50 S. Ct., 436. The transfer is taxable by the State of the domicile of the deceased owner. Blodgett v. Silberman, 277 U. S., 1, 72 L. Ed., 749, 48 S. Ct., 410. Open accounts, including credits for cash deposited in bank, fall within this principle, and its application is not defeated by the mere presence of bonds or notes, or other evidences of debt, within a state other than that of the domicile of the owner. Baldwin v. Missouri, 281 U. S., 586, 74 L. Ed., 1056, 50 S. Ct., 436, supra.
It is sought to sustain the tax by South Carolina upon the ground that the indebtedness had what is called a “business situs” in that State, and the State Court adverted to this basis for the tax. In Farmers Loan & T. Co. v. Minnesota, 280 U. S., 204, 74 L. Ed., 371, 65 A. L. R., 1000, 50 S. Ct., 98, supra, this Court reserved the question of business situs, saying: ”New Orleans v. Stempel, 175 U. S., 309, 44 L. Ed., 174, 20 S. Ct., 110, Bristol v. Washington County, 177 U. S., 133, 44 L. Ed., 701, 20 S. Ct., 585, Liverpool & L. & G. Ins. Co. v. Board of Assessors, 221 U. S., 346, 55 L. Ed., 762, L. R. A., 1915C, 903, 31 S. Ct., 550, recog
In the present case, beyond the mere fact of stock ownership and the existence of the indebtedness, there is no evidence whatever, having any bearing upon the question, save a copy of the decedent‘s account with the corporation, taken from his books which were kept by him in his office at Chicago. The various items of debit and credit in this account, in the absence of any further evidence, add nothing of substance to the fact of the indebtedness as set forth in the agreed statement and afford no adequate basis for a finding that the indebtedness had a business situs in South Carolina.
That the decedent was largely interested in the affairs of the corporation is apparent; he owned a majority of its stock, but nothing is shown which derogates from its existence as a corporation, transacting its business as such,
For these reasons, the judgment of the State Court, so far as it relates to the taxation of the transfer of the debts in question, must be reversed and the cause remanded for further proceedings not inconsistent with this opinion.
It is so ordered.
Mr. Justice Holmes:
The decisions of last term cited by the Chief Justice seem to sustain the conclusion reached by him. Therefore, Mr. Justice Brandeis and I acquiesce, without repeating reasoning that did not prevail with the Court.