227 Mass. 562 | Mass. | 1917
Edith L. Dana died domiciled in Massachusetts and possessed of seventy-five shares in the Amoskeag Manufacturing Company, one hundred and thirty shares in the Boston Ground Rent Trust, and an “interest under the Duluth & Gladstone Real Estate Trust.” A succession tax was im'posed upon each of these pieces of property. Mrs. Dana’s husband, the sole residuary devisee and legatee under her will, made the claim that the three pieces of property in question or “so much of” them as consists of an equitable interest in real estate situate outside the territorial limits of the State were not the subject of a succession tax in this Commonwealth. Thereupon the executor brought a bill for instructions in the Probate Court making the Treasurer and Receiver General and Mrs. Dana’s husband the parties defendant. The Probate Court decided that the property was subject to a succession tax. From that decree Mr. Dana took the appeal which is now before us.
I. Mr. Dana’s contention is that an equitable estate in land lying outside of the Commonwealth although owned by one domiciled in it, at the date of his death is not subject to a succession duty here. There is no question of the correctness of that proposition. See, for example, Attorney General v. Barney, 211 Mass. 134; Walker v. Treasurer & Receiver General, 221 Mass. 600. The question which we have to decide is how far that principle of law is applicable in this case.
2. We take up first Mrs. Dana’s shares in the Amoskeag Manufacturing Company. The Amoskeag Manufacturing Company was the name by which the trustees under a declaration of trust were to be known in their collective capacity as matter of convenience in the practical conduct of the business carried on by them under that declaration of trust. The trust was created to take over the factory and manufacturing business theretofore owned and carried on by a New Hampshire corporation known as the Amoskeag Manufacturing Company. The factory in question and the tangible personal property held under the trust are situate in the State of New Hampshire. “The beneficial
This declaration of trust created a partnership. Upon that point Phillips v. Blatchford, 137 Mass. 510, is decisive. In addition the trust is- well within the distinction between trusts which create partnerships and trusts which are pure trusts, stated at length in Williams v. Milton, 215 Mass. 1, where the cases are collected. For the last case in which this distinction was applied and the trust held'to have created a partnership see Frost v. Thompson, 219 Mass. 360.
It is alleged in the petition and admitted by the answer that at the date of Mrs. Dana’s death over seventy-five per cent of the property of the Amoskeag Manufacturing Company consisted of real estate situate in New Hampshire and twenty-three per cent of it “consisted of tangible personal property in New Hampshire
It is the contention of the appellant that a person dying possessed of one of the shares of this trust dies possessed of real estate to the extent to which the assets of the trust at the time of the decedent’s death consist of real estate and of personal property to the extent to which those assets consist of personal property at that time. And we see no escape from that result if the rule as to partnership real estate which obtains in this Commonwealth in case of ordinary partnerships applies to a partnership like the Amoskeag Manufacturing Company.
In case of an ordinary partnership there is no practical difficulty in carrying out the Massachusetts rule as to partnership real estate, namely, that so far as necessary to pay the debts of the firm partnership real estate is personalty, but that for all other purposes it is real property. In an ordinary case a partnership comes to an end upon the death of each partner and by reason of that fact the partnership affairs have to be wound up at that time. In such a case there is no practical difficulty in winding up the estate of the decedent partner under the Massachusetts rule as to partnership real estate. But the same rule applied to partnership real estate in a partnership like the Amoskeag Manufacturing Company partnership would raise great practical difficulties. Take the case of a person who dies owning one share in the Amoskeag Manufacturing Company partnership. If the Massachusetts rule as to partnership real estate applies that one share (as we have said already) is real estate to an amount determined by ascertaining the proportion of the real estate owned by the partnership to all its assets and is personal property to the amount determined by ascertaining the proportion between its personal property and those assets. If that be so that one share must be dealt with accordingly in winding up the estate of the decedent; that is to say, so far as that one share is real estate it cannot be sold without a license from the Probate Court to sell it as real estate although so far as it is personal property it can be sold by the executor or administrator by virtue of his office.
Wilcox v. Wilcox, 13 Allen, 252, is the case in which the rule as to partnership real estate in case of ordinary partnerships was
It follows that the shares of the Amoskeag Manufacturing Company partnership owned by Mrs. Dana at the time of her death were personal property and passed to her executor by virtue of the laws of this Commonwealth because of her domicil in this State at that time. Since they were personal property a succession tax was rightly imposed upon them.
The appellant contends that this conclusion is in conflict with the decisions of this court in Kinney v. Treasurer & Receiver General, 207 Mass. 368, so far as that non-resident decedent’s interest in so much of the Cambridge Real Estate Associates as
In Kinney v. Treasurer & Receiver General, a succession tax was levied upon the interest of a non-resident in a mortgage on real estate lying within the Commonwealth securing a note owned by the non-resident and also upon his interest in the Cambridge Real Estate Associates represented by a deposit book of the owner pledged with the non-resident decedent to secure the owner’s note. A succession tax upon the interest of the decedent in the mortgage of real estate situate within the Commonwealth was supported on the ground that a mortgage in Massachusetts conveys the legal title to the mortgagee and for that reason the mortgagee had an interest in the real estate within the Commonwealth. The succession tax imposed upon the interest of the decedent in the Cambridge Real Estate Associates (which he got by being the pledgee of the deposit book of the owner) was supported on the same ground. It was assumed in the opinion in that case that all the property of the Cambridge Real Estate Associates was real estate. It appears from the report of that case, however, that although the great bulk of it was real estate yet the associates in fact owned two shares in the Calumet and Hecla Mining Company. And it is on the decision made in Kinney v. Treasurer & Receiver General so far as the non-resident decedent’s interest in those two shares of mining stock is concerned that the appellant now relies. The existence of these two shares of personal property was not referred to in the opinion. The opinion proceeded on the ground that a hypothecation of an equitable interest in real estate stood on the same footing as a legal mortgage of real estate. That is all that the court undertook to decide in that case and all that that case can be taken to stand for as an authority. So far as the non-resident decedent’s interest in the two shares of mining stock (the existence of which was ignored by the court) was concerned the case was in fact rightly decided because it appears from the record in that case that the trustees of the Cambridge Real Estate Associates all of them were residents of Massachusetts and that all its property real and personal was in Massachusetts. That being so a succession tax was rightly imposed upon the interest of the nonresident pledgee of the deposit book so far as the pledge of the de
The Attorney General has placed much reliance upon the decision in Kennedy v. Hodges, ubi supra, so far as the decision in that case concerned certificates for shares in the Western Real Estate Trust. The character of the property owned by that Trust was not stated in the record. It was alleged in the bill and admitted in the answer that the shares were personal property.
We are of opinion that the succession tax imposed upon Mrs. Dana’s shares in the Amoskeag Manufacturing Company was valid.
3. We are of opinion that the same conclusion must be reached with respect to the succession tax imposed upon the one hundred and thirty shares in the Boston Ground Rent Trust held by Mrs. Dana at the date of her death.
At the date of Mrs. Dana’s death eighty-five per cent of the property of that trust consisted of real estate situated outside of Massachusetts. On the allegations contained in the petition and admitted by the answer it must be taken that the balance or fifteen per cent consisted of personal property. The beneficial interest in this trust was divided into shares and for these shares transferable certificates were issued by the trustees. The declaration of trust provided for meetings of the shareholders at which they might instruct the trustees in any manner not inconsistent with the declaration of trust and at which the declaration of trust might be altered or added to accordingly. It further provided that at a time fixed in the trust “or at such earlier time as three fourths in value of the shareholders may . . . appoint” the trustees should terminate the trust by selling all property then held by them and dividing the proceeds among the shareholders. The principal difference between the Ground Rent Trust and the Amoskeag Manufacturing Company is that the personal property (amounting to fifteen per cent of all the property of the trust at Mrs. Dana’s death) did not come into existence until after the creation of the
The conclusion which we have reached as to Mrs. Dana’s interest in the Boston Ground Rent Trust seems to be in conflict with the conclusion reached in Bartlett v. Gill, 221 Fed. Rep. 476, as to the character of shares in City Associates, Commonwealth Land Trust, Boston Real Estate Trust, Bedford Building Association and the Municipal Real Estate Trust. It does not appear affirmatively that personal property as well as real estate was held by the trustees of those trusts. But it was assumed in Bartlett v. Gill, that that might have been the case. We have examined the authorities cited in Bartlett v. Gill and find nothing in them inconsistent with the conclusion which we have reached; so far as the decision in that case is in conflict with the conclusion here reached we are of opinion after giving due consideration to it that it ought not to be followed. Beal v. Carpenter, 235 Fed. Rep. 273, is the only other case which has come to our attention in which these matters are discussed.
4. The “interest” or, speaking more accurately, the interests of the decedent in the Duluth and Gladstone Real Estate Trust are quite different.
Without going into details we are of opinion that by the true construction of that trust the decedent had interests in it of two kinds. The property of that trust consisted of real estate and real estate alone. The persons interested in the trust were Mrs. Dana (the decedent), Mr. Dana (her husband) and a Mr. Hale. The real estate consisted of one parcel of land in Duluth
There was no provision in the declaration of trust for meetings of the owners of the beneficial interests in this trust property. The owners of the beneficial interest had a common interest but they were not associated together in any way. As we have already said there was no personal property held by the trustee and there was no provision for the issue of certificates to represent, the shares to those who held the beneficial interests in the trust. There was a provision putting restrictions upon the assignment of their interests by the owners of the beneficial property
But Mrs. Dana’s interest created by this declaration of trust, which secured to her the payment of $9,033 by a pledge of Mr. Hale’s beneficial interest to the extent of one half of the land in Duluth and his beneficial interest in the whole of the land in Gladstone, was subject to a succession tax in Massachusetts. This interest was of the same kind as the interest of the holder of a note secured by mortgage on land lying outside the Commonwealth. In both cases the debt is personal property; it passes by succession to her executor by force of the laws of Massachusetts and so is subject to a succession tax here.
The Attorney General has contended that the undivided fourth interest of Mrs. Dana is personal property because it is impliedly provided that it shall pass by assignment: The exact provisions of the declaration of trust are given below. And he has made the same contention with respect to Mrs. Dana’s interests in Amoskeag Manufacturing Company and in the Boston Ground Rent Trust. This contention is not of consequence in connection with the Amoskeag Manufacturing Company and the Boston Ground Rent Trust because we have reached the conclusion that Mrs. Dana’s interest in those trusts was personal property for other reasons. The argument of the Attorney General is that a beneficial interest in real property can be conveyed by deed only. In other words that so far as the conveyance or transfer of the equitable ownership in real property is concerned the same rule applies as that which governs the conveyance of a legal title to land, and since it is provided (at least impliedly) that these equitable interests can be assigned without a deed it is provided that they are personalty. But although support for that contention is to be found in Bartlett v. Gill, ubi supra, at page 485, it is without foundation. Conveyances of legal estates are the outcome of feudal tenures and are founded on the doctrine of feoffment with livery of seisin. The transfer of an equitable interest in real estate has nothing to do with feudal tenures and is not dependent on the doctrine of feoffment with livery of seisin. The only provision of law regulating the transfer of an equitable estate in land
Another contention of the Attorney General is that Mrs. Dana’s interest as owner of one undivided fourth part of the Duluth real estate is subject to a succession tax in this Commonwealth because the sole trustee was and is a resident of this Commonwealth, and he contends for that reason that a succession tax upon that interest comes within the decision made in Bliss v. Bliss, ubi supra, as to registered bonds of the Commonwealth. We do not need to decide whether that contention would have been correct had nothing more appeared in the case. But more does appear: it is alleged in the petition that: “Said interest [Mrs. Dana’s] under the Duluth and Gladstone Real Estate Trust consists of an equitable interest in real estate situated entirely outside of Massachusetts in the States, of Minnesota and Michigan. It is the law of each of said States that the trust is to be enforced as to the real estate in each of those States by the courts in those States respectively without recourse to the laws or the courts of Massachusetts.” This allegation was admitted by the Attorney General in his answer. Whether the statutes of Minnesota and Michigan do or do not provide for an enforcement of a trust with respect to real estate situate within their territorial limits when the trustee resides out of the State are questions of fact. The counsel for Mr. Dana has contended that the allegations set forth above are allegations of the existence of such statutes and we are of .opinion that in this contention he is right. It follows that on the record it must be taken to be the fact that without resorting to the courts of this Commonwealth Mrs. Dana and her successor in title could have asserted their rights as owners of one undivided fourth part in the beneficial property in the Duluth real estate, and this interest does not come within the decision in Bliss v. Bliss, ubi supra.
It may be noted in passing that the case at bar m this connection is not like Kinney v. Treasurer & Receiver General, ubi supra, and Peabody v. Treasurer & Receiver General, ubi supra. In those
It must be taken on the record that the succession duty imposed upon Mrs. Dana’s “interest under the Duluth and Gladstone Real Estate Trust” was imposed upon all the interests which she had under that trust. That is to say both upon her interest as the holder of a debt secured by’ pledge of Mr. Hale’s equitable interest under the trust and as holder of an undivided equitable fee in that portion of the trust property which consisted of land in Duluth. So far as the latter is concerned the property was not subject to a succession tax. To that extent the decree of the Probate Court was wrong; so far as the former is concerned it is right.
It does not appear whether the succession tax imposed upon Mrs. Dana’s “interest under the Duluth and Gladstone Real Estate Trust” was imposed on her interest by way of a lien for the payment of the $9,033 or upon her interest as owner of an undivided quarter beneficial fee in the land in Duluth or on both. It follows that the decree of the Probate Court was wrong so far as it declared that the succession tax imposed upon Mrs. Dana’s “interest under the Duluth and Gladstone Real Estate Trust” was valid.
It is alleged in the bill that the rate of the succession tax depends upon the taxes imposed upon all the three pieces of property being valid. It follows that the whole decree must be reversed and the case stand for hearing before a single justice. It is
So ordered.
The provision referred to was as follows: “No assignment of a subscriber’s interest shall be made of less than one half his original interest and not to more than one person, though more than one person may take under a will or as distributee. Any assignment to be valid must be in duplicate, each countersigned by the trustee and one preserved by him. On any new assignment of the same interest the old one must be delivered to the trustee to be cancelled to the amount of the interest assigned.”