236 N.W. 626 | Minn. | 1931
The appellant contends that the imposition of the tax is in violation of the
G. S. 1923 (1 Mason, 1927) §§ 2292 and 2302, provides for a tax upon the transfer of property, by will or intestate law, within the state or its jurisdiction although the decedent be a nonresident, and specifically prohibits the transfer by Minnesota corporations of shares of stock standing in the names of nonresident decedents without the consent of the attorney general, to be given only upon the payment of the tax. In our opinion these statutes in effect create a lien in favor of the state upon the interest in the corporation represented by the shares. Frick v. Pennsylvania,
This court has definitely held that shares of stock in Minnesota corporations, although held by nonresidents, have a situs within the jurisdiction of this state and are subject to the Minnesota inheritance tax. State ex rel. Graff v. Probate Court,
Whatever nomenclature we apply to the character of a shareholder's interest, it is a property interest in the corporation itself which can effectively be transferred only under the protection and by authority of the laws of the state whose creature the corporation is. State ex rel. Graff v. Probate Court,
The Supreme Court of the United States has frequently held that the situs of shares of stock in a domestic corporation is, for the purposes of taxation, in the state where the corporation is organized. This is certainly true where its business is wholly carried on, as in the case at bar, in the state where it is organized.
In the case of Corry v. Baltimore,
"Certainly, the exercise of such a power is no broader than the well recognized right of a state to affix to the holding of stock in a domestic corporation a liability on a nonresident * * * stockholder in personam in favor of the ordinary creditors of the corporation." See also Rhode Island H. T. Co. v. Doughton,
While the Minnesota statute does not in express terms sever the situs of the shares from the domicile of the owner, this court has *372
held that no such express provision is necessary and that it is sufficient that the statute has exerted jurisdiction over the shares and manifested an intention to tax them. State ex rel. Graff v. Probate Court,
As we interpret its decisions, the United States Supreme Court has recognized that the stock of a domestic corporation is sufficiently localized within the state of its organization and existence to justify such state in imposing a succession tax such as ours upon the transfer by inheritance of the shares belonging to nonresidents. The inheritance tax imposed by New Jersey is, like our own, a succession tax, and the late James J. Hill, a resident of Minnesota, was the owner of a large block of shares in the Northern Securities Company, a New Jersey corporation. One James McDonald, a resident of the District of Columbia was at the time of his death the owner of stock in the Standard Oil Company of New Jersey. The state of New Jersey levied its inheritance tax on the shares of these companies owned by these decedents, and the validity of the assessment was before the Supreme Court in the case of Maxwell v. Bugbee,
"It is not to be disputed that, consistently with the Federal Constitution, a state may not tax property beyond its territorial jurisdiction, but the subject matter here regulatedis a privilege to succeed to property which is within thejurisdiction of the state. * * * In the present case the stateimposes a privilege tax, clearly within its authority, and has adopted as a measure of that tax the proportion which the specified local property bears to the entire estate of the decedent. * * * It is in no just sense a tax upon the foreign property, real or personal." *373
Again, in the case of Frick v. Pennsylvania,
"The decedent owned many stocks in corporations of states other than Pennsylvania, which subjected their transfer on death to a tax and prescribed means of enforcement which practically gave those states the status of lienors in possession. As those states had created the corporationsissuing the stocks, they had power to impose the tax and toenforce it by such means, irrespective of the decedent'sdomicile and the actual situs of the stock certificates."
In consequence of this right the court held that under the
In so far as this question has been presented to state courts, they have usually held that the state may impose the tax upon shares in a domestic corporation owned by a nonresident. State v. First Nat. Bank (Maine)
We therefore hold that the situs of the property interest in a corporation represented by domestic corporate stock is localized within this state and that its ownership by a nonresident does not remove it from the jurisdiction of nor prevent the state from enforcing its lien for the succession tax which it has imposed upon its transfer by will or intestate law.
The order appealed from is affirmed.