185 A.D. 445 | N.Y. App. Div. | 1918
The executors of the last will and testament of decedent, as well as certain beneficiaries under said will, have appealed from an order of the Surrogate’s Court of New York county, Mr. Surrogate Cohalan presiding, ordering and adjudging that the deceased be deemed to have died a resident of the State of New York, and providing for the taxation of his
The appellants assign error in the determination of the surrogate that said decedent, at the time of his death, was a resident of or domiciled within the State so as to render his estate liable to taxation under the Transfer Tax Law. The appellants contend that, as a matter of fact, the testator did not so lodge or dwell within the State as to render his estate taxable. Moreover, the appellants insist that the construction placed upon the statute by the order appealed from, creating a conclusive presumption of domicile of the decedent by reason of lodging or dwelling within the State, was erroneous, appellants contending that said enactment merely created a presumption of residence which he might overcome by evidence to the contrary.
William Barbour, the testator, was bom in the city of New York in September, 1856. At the age of five years, his parents removed to the city of Paterson, N. J., taking with them their son, the testator. He continued thereafter to reside with his parents at Paterson and at its suburb, Warren Point, in Bergen county, N. J., for many years. As a boy he attended school at Paterson, and in 1883 married at Warren Point in that State. After his marriage he continued to reside'at Warren Point until he sold his property there in 1905. During these years of his married life he spent a part of each year at his New Jersey residence, but sometimes during the winter stopped at the Navarro Flats and at the Savoy Hotel in New York city. Some winters were spent at Warren Point, and his summers were, for the most part, passed at Monmouth Beach, N. J., where he had located his summer home. However, dining all this period he maintained a residence at Warren Point and, the evidence shows, himself supported a church at that place. During his entire maturity, and until his death, he was actively engaged in the manufacture of thread in the State of New Jersey, and was closely associated in the creation and management of a large number of business and moneyed institutions in that State. About the time he disposed of his house at Warren Point, he bought a large and expensive “ cottage ” at Monmouth Beach, N. J. Later he sold this residence, having in 1908 acquired a magnificent
While temporarily absenting himself from the home of his youth and more active years, while passing the winters in the city of New York and a portion of his summers in pursuit of the sports afforded by the Adirondack wilderness, the decedent at no time manifested any intention of changing his residence from the State of New Jersey. Not alone by his declarations
The respondent, the Comptroller of the State of New York, makes little attempt to deny the almost indisputable fact that the testator intended and was in fact a domiciled resident of the State of New Jersey at the time of his death, but relies upon the provisions of the Transfer Tax Law of the State declaring that a person dwelling or lodging in this State during the greater part of any period of twelve consecutive months in the twenty-four months next preceding his death shall, for the purposes of article 10 of the Tax Law and for the just imposition of the transfer tax, be deemed to have died a resident and not a non-resident of the State of New York. The record discloses that the greater part of the year prior to his death the testator had spent in the State of New York. The amended statute upon which the Comptroller relies was enacted in 1916, being chapter 551 of the Laws of 1916 (amdg. Tax Law [Consol. Laws, chap. 60; Laws of 1909, chap. 62], § 243), and, so far as pertinent to the matter under consideration, provides as follows: “ For any and all purposes of this article and for the just imposition of the transfer tax, every person shall be deemed to have died a resident, and not a nonresident, of the State of New York, if and when such person shall have dwelt or shall have lodged in this State during and for the greater part of any period of twelve consecutive months in the twenty-four months next preceding his or her death; and also if and when by formal written instrument executed within one year prior to his or her death or by last.will he or she shall have declared himself or herself to be a resident or a citizen of this State, notwithstanding that from time to time during such twenty-four months such person may have sojourned outside of this State and whether or not such person may or may not have voted
Recoruse may be had to the legislative history of the amendment of 1916 to discover what the Legislature intended by the language used. As originally introduced, the bill contained the word “ conclusively ” after the'words “ shall be deemed,” and, as originally introduced, that portion of the bill read as follows: “ For any and all purposes of this article and for the just imposition of the transfer tax, every person (and also his wife) shall be deemed conclusively to have died a resident, and not a non-resident, of the State of New York, if and when such person shall have dwelt or shall have lodged in this State during and for the greater part of any period of nine consecutive months in the twenty-four months next
And, as originally introduced, the provision that “ the burden of proof in a transfer tax proceeding shall be upon those claiming exemption by reason of the alleged nonresidence of the deceased ” did not appear. Before final passage the bill was amended by strildng out the word “ conclusively ” following the words “ shall be deemed,” and adding the provision last above quoted with reference to the burden of proof upon those claiming exemption by reason of the alleged non-residence of the deceased. These facts are most significant and furnish strong evidence that the Legislature did not, by the use of the words “ shall be deemed,” intend to proMbit proof to overcome the presumption and to show actual non-residence of the deceased. Such Mstory of the enactment robs it of that conclusiveness upon the question of residence for which the Comptroller contends. Such a construction as that for which respondent contends would be most unreasonable and unjust. It would subject the estate of a deceased person to double taxation, and it is not inconceivable that through such a scheme of taxation the estate might be greatly depleted or even entirely exhausted. If, as before suggested, decedent’s estate be taxable here and is also subjected to a tax in the acknowledged State of his domicile, New Jersey, which latter is, according to the brief of the appellants herein, now an accomplished fact, we will have a double taxation of this estate. Unquestionably the Legislature may possess power to provide double taxation, but, as stated in Matter of Cooley (186 N. Y. 220, 227): “ It is plain that, measured by ordinary principles of justice, the result suggested would be inequitable and might be seriously burdensome.
“ Double taxation is one which the court should avoid whenever it is possible within reason to do so. (Matter of James, 144 N. Y. 6, 11.)
“It is never to be presumed. Sometimes tax laws have that effect, but if they do it is because the Legislature has unmistakably so enacted. All presumptions are against such an imposition. (Tennessee v. Whitworth, 117 U. S. 129.)
“ The law of taxation is to be construed strictly against the State in favor of the taxpayer as represented by the executor
If this statute was really intended for more than a mere rule of evidence, the Legislature might have as well named a month’s or a single day’s lodging within the State of New York as ground for subjecting the estate of a deceased person to taxation.
The right of the State to tax the estate of a deceased resident is upon the ground that by the favor of the State a right of succession in such property is accorded, and having granted such privilege of succession the State has the undoubted right to curtail the same by taxation, and so, appropriating a part of the estate with which to bear the expenses of the government under whose protection the estate has been accumulated and has existed. Unquestionably real property situated within the State owned by a non-resident is subject to taxation, as the property itself is here. And so, too, any personal property of a deceased person which may be physically present at the time of death can be laid hold of by the State for the purpose of taxation under our statutes. But as to personal-property not physically within the State of New York, of a non-resident of this State, no such power exists. The very basis of such taxation, which is the right of succession, is wanting, because the succession thereto is created and governed by the law of the foreign State of which the deceased was a citizen. (Matter of Embury, 19 App. Div. 214, 218; affd., on opinion below, 154 N. Y. 746.)
As was said by Judge Cullen in Matter of Gihon (169 N. Y. 443, 447), it is “ a tax not on property, but on succession; that is to say, a tax on the legatee for the privilege of succeeding to property. (Knowlton v. Moore, 178 U. S. 41.)”
The right of the State to impose any tax is based on its dominion over the property situated within its territory. As was said by Gray, J., in Matter of Bronson (150 N. Y. 1, at the top of page 8): “ It is obvious that the State had no jurisdiction over a right of succession which accrues under the laws of the foreign State. That is something in which this State has no interest, and with which it is not concerned.” (Matter of Swift, 137 N. Y. 77; Matter of Merriam, 141 id. 484.)
In Matter of Houdayer (3 App. Div. 474; 150 N. Y. 37)
The analogy is suggested between the situation here and that of liability to jury duty of a person who resides in another State, but who conducts business here and.has a substantial residence here, although his domicile may be elsewhere. It has been held that such a person can be compelled to serve as a juror here because of and as a return for the protection afforded by the State. (People ex rel. Turner v. Plimley, 8 App. Div. 325.)
Such liability to jury service comes through certain unequivocal statutory enactments aimed at the correction of evils arising from the common practice of persons who were in fact residents of the city of New York seeking to avoid the burden of jury service by acquiring a domicile elsewhere — usually at their summer abode; that while their business and social activities were here, they, for the purpose of escaping jury duty and taxation, voted and established a domicile elsewhere. No such ulterior purpose is charged against the decedent. He has since his early boyhood consistently resided in New Jersey. This is not a case of tax-dodging. The deceased, so far as the evidence discloses, paid all taxes assessed against his property, real and personal, to which he was subjected as a non-resident. All that his personal representatives, not unreasonably, ask is that the State having dominion over, and by virtue of the laws of which others
The taxation of inheritance is of long standing. In England, death duties have been imposed for centuries. Other European countries have adopted such form of indirect taxation, under such various names as death duties, legacy taxes, succession duties, inheritance taxes, probate duties, estate taxes, privilege taxes, etc. In 1797 our Federal government imposed a legacy tax. (1 U. S. Stat. at Large, 527, chap. 11.) Since then several acts of a similar character have been passed by Congress. ' The present Federal statute providing an estate tax upon the transfer of the net estate of a decedent was enacted in 1916. (39 U. S. Stat. at Large, 777, chap. 463, tit. 2, as amd.) Under former statutes the right of the Federal government to impose a tax of this character has been questioned, because of the fact that such a tax is upon the right of succession, and which right may alone be regulated by a State. But in Knowlton v. Moore (178 U. S. 41) it was pointed out that such a tax is imposed upon the transmission or receipt of the property, rather than upon the right to regulate such transmission or receipt after death, and the court there held the act constitutional, notwithstanding the devolution of the property transferred was under the control of the State of New York, where the testator in that case was domiciled. I do not think the principle enunciated in Knowlton v. Moore can be applied to the instant
With reference to the power of the Legislature to enact a' statute of the force which the Comptroller seeks to give to the amendment of 1916 to the Transfer Tax Law, while it is not open to serious dispute that it has power to enact that one fact shall be evidence of another, it is a self-evident proposition that the Legislature cannot make so that which is not so. When, as here, the statute says that under the circumstances named residence shall be deemed to exist, and the fact is that it does not exist, the statute does not make the fact otherwise than it is. At most, it creates a presumption which may be overcome by evidence to the contrary.
The order appealed from should be reversed, with costs, and the proceeding remitted to the Surrogate’s Court of New York county for assessment as the estate of a non-resident.
Clarke, P. J., Dowling, Smith and Shearn, JJ., concurred.
Order reversed, with costs, and proceedings remitted to the Surrogate’s Court for further action in accordance with opinion.