11 N.E.2d 722 | NY | 1937
This appeal brings here for decision the question of the constitutional validity of section 249-p of the Tax Law (Cons. Laws, ch. 60), which prescribes a "Tax on estates of nonresident decedents." It is thereby provided:
"A tax is hereby imposed upon the transfer of so much of the net estate of every person dying on or after the effective date of this article, who, at the time of death, was a nonresident of this state, as consists of real property situated and tangible personal property having an actual situs in this state. The amount of the tax on such real and tangible personal property shall be determined at follows:
"Ascertain the amount of tax which would be payable under this article if the decedent had died a resident of this state with all his property (except real property situated and tangible personal property having an actual situs outside this state) situated or located within this state, and multiply the net tax so ascertained by a fraction the denominator of which shall be the value of the gross estate as ascertained for the purpose of computing such *187 tax and the numerator of which shall be the said gross estate value of the real property situated and the tangible personal property having an actual situs in this state. The product shall be the amount of tax payable to this state. No credit shall be allowed against the tax so determined.
"The tax imposed by this section shall be paid by the executor, who shall thereupon charge the same against and collect it from the persons interested in the estate in order that it shall be proportionately borne by those who have received the benefit."
Mary Moore Lagergren died May 19, 1933, a nonresident of this State. She left a will which was admitted to probate by the Surrogate's Court of the county of New York. At the direction of the Surrogate an appraiser fixed the fair market value of property of the estate subject to tax under the statute. His report showed a gross estate (including intangibles) of $818,954.74, total deductions of $254,230.33, and a net estate of $564,724.41. The total valuation of real property situated and tangible personal property having an actual situs within this State was reported to be $769,250. Exemptions allowed in the sum of $10,000 were deducted from the net estate of $564,724.41, leaving $554,724.41 as the estate the transfer of which would be taxable had the decedent died a resident of this State. In that event the tax would be $16,636.22.
In accordance with section 249-p, the Surrogate by a proforma order found that 769250.00, or 93.9307 per 818954.74 cent of $16,636.22, was the amount of tax payable to this State, viz., $15,626.52.
Intangibles included in the denominator of this fraction were valued at $42,739.81. The executors thereafter moved to modify the pro forma order "in so far as said order assesses a tax upon the basis of intangible personal property not situated within this State." This motion *188 was granted by an order which deducted the value of the intangibles from that of the gross estate and fixed the total tax accordingly at $14,499.23, a reduction of $1,127.29. The State Tax Commission appeals from the affirmance of that order by the Appellate Division.
It is clear that the transfer of the intangibles owned by this non-resident decedent cannot be taxed in this proceeding. This transfer — the taxable event — occurred at the decedent's domicile outside this State. A tax thereon would offend the guaranty of due process. (U.S. Const., 14th Amendt., § 1; FirstNat. Bank v. Maine,
In Maxwell v. Bugbee (
The executors do not deny that, so far as the issue has been determined by Maxwell v. Bugbee, the statute here challenged does not attempt to impose an extraterritorial tax in contravention of due process. We are told, however, that what the court said in that case must be read in the light of its later decisions condemning double taxation (First Nat. Bank v.Maine, supra; Wheeling Steel Corp. v. Fox,
In Great Atlantic Pacific Tea Co. v. Grosjean
(
Thus there is no warrant for our saying that the point of constitutional law announced in Maxwell v. Bugbee has been repudiated. Only the court which decided it can say whether fresh consideration of that border-line case is desirable. It follows that the statute before us must here be upheld as written and that the tax assessed by the original pro forma order is payable to this State.
In reaching the contrary conclusion, the Surrogate relied uponMatter of Rueff (
"Gross estate" is defined by section 249-r of the Tax Law. The definition excludes "real property situated *191
and tangible personal property having an actual situs outside this state." Section 249-s provides that "the value of the net estate shall be determined by deducting from the value of the gross estate" the full amount of debts, expenses and losses. In the Rueff case the net estate, so ascertained, was $61,122.31. The intangibles included in the gross estate were valued at $78,743.90. On that showing the Surrogate there said: "It is apparent, therefore, that if the value of the intangibles had been excluded from the gross estate and had the same deductions been made there would have been a deficit of $17,621.59 reported instead of a net estate of $61,122.31. No tax can be assessed on a deficit." (
In the present case the estate (exclusive of intangibles) is $521,984.60 after all deductions are made.
The order of the Appellate Division should be reversed and that of the Surrogate's Court modified in accordance with this opinion, and as so modified affirmed, and the matter remitted to the Surrogate's Court for further proceedings in accordance with this opinion, without costs.
CRANE, Ch. J., LEHMAN, O'BRIEN, HUBBS, FINCH and RIPPEY, JJ., concur.
Ordered accordingly. *192