109 Misc. 112 | N.Y. Sur. Ct. | 1919
The appeal of the state comptroller from the order assessing a tax upon the estate of the late Mrs. Hetty Green brings up for review the finding of the appraiser, that she was “ not doing business in this state,” within the meaning of that phrase in the last clause of subdivision 2 of section 220 of the Tax Law. The notice of appeal contains also a statement that the state comptroller wishes to have reviewed in the Court of Appeals the order of this court and that of the Appellate Division confirming the order of this court to the effect that the deceased did not have her domicile in this state at the time of her death. As the issue of domicile is res adjudicata, in so far as this court and the court of the Appellate Division are concerned, it cannot be further considered on this appeal.
The history of the taxation of this estate is somewhat peculiar. The deceased happened to be a woman of large estate, familiarly known to the public and the authorities, and there is some reason to suppose that the latter counted on her succession to augment the
When Mrs. Green came to die, at the outset of the contention over death duties, due to the state on her succession, the taxing authorities first claimed that she had died a resident of this state, and that her estate was taxable as that of a non-business resident. I found that she was not a resident of this state, but of Vermont, and therefore not taxable on the ground of residency. My judgment was affirmed on appeal. 99 Misc. Rep. 582, 179 App. Div. 890. Defeated in their claim as to Mrs. Green’s last domicile, the state next turned 'about, and asserted that her capital was employed in “ business ” in this state, and was for that reason taxable. This point, after due deliberation, I also decided adversely to the state of New York. 102 Misc. Rep. 45. The Appellate Division, however, reversed my judgment on that last point (184 App. Div. 376), and remitted the taxation for further inquiry, on very general principles I think, with due deference, of an administrative, rather than a legal, nature. Under the authorities no legal error by me was specified by the Appellate Division, nor could be, for no evidence had been excluded by the appraiser except under the authority of the Supreme Cour-t of the United States.
As the Appellate Division did not specifically indicate the particular questions which they deemed improperly excluded by the appraiser, the appraiser to whom the matter was again remitted, in accordance with the direction of the Appellate Division, thought
It is important, I think, to notice that in the conclusion of the opinion by Mr. Justice Shearn (184 App. Div. 376) it was said: “ Such an inquisition should not be made oppressive or vexatious but, being prosecuted in good faith, should be sanctioned in so far as it tends to develop relevant facts. This amendment of the statute may result in an enormous gain for the State in taxable property, and save for the State great sums in taxes which have hitherto been lost by the practice of persons who, having great fortv/nes invested as capital in this State, escape their just share of taxation for the protection that the State affords to their capital by maintaining a domicile in some other State. Respecting the inquisition which the law authorizes the .Comptroller to make in order to determine whether the estate of a decedent is subject to taxation, the policy of the court should be one of encouragement and not of repression. The order
It is obvious that the portion of the opinion just quoted refers to both economic matters and matters purely of public polity. There was nothing in the evidence to warrant any implication that in this state any rich escaped taxation, or that Mrs. Green was among those who so did escape. It may be so, but such an inference was dehors the proofs in this case. Consequently I feel at liberty, but for strictly juridical and ethical purposes, to consider the same economic matters and matters of public polity outside of the case, but at greater length. In democratic republics, with universal suffrage, the growing danger of injustice is not to the poor, but to people of property. We should remember that other great states have failed in the past when the country swarmed with a consuming hierarchy of extortion, and the receivers of taxes outnumbered the taxed, who were destroyed under forms of law.
Before proceeding, let me refer first to the several inconsistent positions before mentioned of the state taxing agents. Formerly in all legal proceedings a party public or private, having relied on an express state of facts as the basis of legal relief, was not permitted aferwards to shift his ground by a subsequent assertion of other matter, absolutely contradictory of the first state of facts set forth in the earlier position or pleading. It was then held in law, as it is still maintained in logic, that inconsistent assertions are mutually destructive. There was manifestly great
It is common knowledge that the scope and objects of taxation by the state are being greatly extended in modern times. It is claimed by people of property that they are being more and more placed at a relative disadvantage in the state and nation, with the growing danger that both private right and private property as hitherto understood may be subverted. That the modern processes of taxation are being subtly misapplied to the ends of the socialistic movement is generally admitted by professional economists. All sorts of social reforms, to be brought about through processes of taxation, are in the political air, with the result that to many deep-thinking men the economic future is full of dubious signs. Some, indeed, profess that a political and social strife has already been
But if wholly irrelevant in courts of justice it is useful in argument to notice the character of some of the objections now being urged by taxpayers to modern schemes of taxation. They say, for example, that an examination of the budget of most states discloses that the annual tax levies are devoted, first, to the improvident funded or interest-bearing debt and next to public improvements or social betterments, and only lastly to the purpose of carrying on the business of government. This they assert is unjust and unconstitutional, and many claim that there ought not to be a state funded debt, or taxation for any other object than carrying on the expenses of actual government. No good citizen objects to taxation, I take it, when the tax is levied for the actual purposes of government itself. Many taxpayers do object to the new and more extended purposes and objects of modern taxation. Some object to a funded public debt because it engenders extravagance and waste and war.
The existence of a public debt came very late in the history of European states, and in England it does not antedate the reign of William and Mary. The doubtful honor of inaugurating deferred public debts in England is due to Charles Montague, Earl of
We have now noticed, but only rapidly and cursorily, some of the great economic and philosophic claims, now being made, concerning schemes of modern taxation. It ' :s not been thought necessary to detail the socialistic claims. The leveling principles of the socialists and collectivists are, in regard to taxation of the rich, already only too familiar. The public discussion concerning constitutional taxation would not have been noticed at this time had it not been for the reason mentioned at the outset. To every public question, including taxation, there are two sides. One is apt to be as right as the other. The truth is generally to be found in via media.
The foregoing recital of the public controversy, now being waged in regard to taxation, is somewhat unusual, and it may be thought to have no proper place in an orthodox legal opinion — which is traditionally a dry, formal syllogism, too often logically defective, but usually more or less condensed, according to the superior skill in that line of the particular judge. While a long discussion of the moral atmosphere of the subject matter of litigation may not be relevant
The question thus presented to me for determination is whether the additional evidence submitted to the appraiser upon the new hearing warrants a conclusion contrary to that at which I arrived in my prior decision. 102 Misc. Rep. 45. I have given careful consideration to the opinion of the Appellate Division directing a reversal of the order entered on my previous decision, but have been unable to discover there the enunciation of any principle determinative of the question presented by the facts upon which the conclusion of the appraiser is based. That court in the course of its opinion did state (p. 380): “ The evidence taken before the appraiser is insufficient tq determine whether Mrs. Green was merely making investments of surplus income from time to time, and if so, whether this was done in such a manner, in such volume, and so regularly and frequently as to present the question whether the course of dealing constituted doing business; or, on the other hand, whether she was engaged in the business of money lending. ’ ’
The sentence quoted would seem to indicate that the learned justice who wrote the opinion of the Appellate Division was inclined to think that money lending by a capitalist, or the making of investments of sur
Precisely what the Tax Law (§ 220, subd. 2, “or when the transfer is by will or intestate law of capital invested in business in the state by a non-resident of the state doing business in the state * * * ”) intends by doing “ business ” is ambiguous. The use of an equivocal term such as 6 ‘ business ” in a statute is certainly unfortunate. Equivocal terms should never be employed in drafting statutes. Such words as “ trade,” “ commerce,” or “ brokerage,” on the other hand, have a settled and definite common-law meaning, and could, I think, with advantage have been substituted for the word business in section 220 of the Tax Law, To ascertain the meaning of words we mast
In all languages the word “ business ” standing alone, is equivocal, or one which depends on context for its definition, e. g., private business is not public business. For this reason the definitions of “ business,” contained in English dictionaries, are not regarded by courts as adequate for legal conclusions. People ex rel. Parker Mills v. Commissioners of Taxes, 23 N. Y. 242. Although the lexicographers fail us, in this instance, there are certain settled grammatical and logical principles which logicians and the grammarians employ in order to determine when a vocable is absolute or relative in meaning, complete in itself or of an adjective character. These principles can aid us. All words are either equivocal or without equivocation, that is to say, relative or absolute in meaning. So all verbs are either of complete or incomplete predication. Bes and negotium in Latin, pragma in Greek, chose in French, “ thing ” and “ business ” in English, are specimens of equivocal words which require to be complemented, as the grammarians say, by amplification and qualification or locution before an accurate logical or legal definition is possible. They are words of compound significance, not simple terms. Now, the noun “ business ” is the correlative abstract of the neuter verb “ to be busy.” This particular verb is used only in the middle voice in Greek or French, and it is so used logically in English. Verbs used only in the middle voice are incomplete in significance and predication. Such are the tests, I believe, by which the scientists, logicians and grammarians determine whether terms are or are not definable of themselves. By the tests indicated the noun “ business ” and the verb “ to be busy ” have no definite meaning standing alone.
I have stated that the word “ business ” is not a technical term of the common law. Every science has its appropriate terminology. In drafting statutes it is highly desirable to employ such terms as “ trade,” “ commerce,” etc., which have a settled meaning by the common law, for at each repetition of such terms they retain the common-law significance. Despard v. Churchill, 53 N. Y. 192, 199; Perkins v. Smith, 116 id. 441; Waters & Co. v. Gerard, 189 id. 302, 309; South Carolina v. United States, 199 U. S. 437, 449, 450.
How equivocal the noun “ business ” really is will be readily perceived by trite examples. If a master is engaged in playing a game his servant may reply to a visitor, 11 You can not see the master now, he is
No adjudication in the courts of this state or in the federal courts which is decisive of this appeal has been cited to me. Dicta of either foreign or domestic courts, however respectable, are not adjudications. It must be obvious that a repetition of the same character of transactions is not, as sometimes said in the cases, the true test of ‘‘ business, ’ ’ as contradistinguished from investment or employment of capital by a non-business person. It is easy to conceive of an organized speculative “ business,” conducted by a firm regularly organized for trade, where every successive transaction is entirely different from all its predecessors. That firm ought to be held to be engaged in business notwithstanding its transactions all differ and are never repeated.
No matter how often repeated or continuous transactions may be, if conducted by persons not in trade or commerce for purposes of investment of capital and income, they do not, I think, constitute “ business ” within the meaning of the Tax Law. Smith v. Anderson, 15 Ch. Div. 247. Investments, for example, even the most speculative, if made by executors or
Nor is an elaborate office organization the legal test of doing business. Large private estates often require clerks, bookkeepers and sometimes an extensive office. They constantly reinvest surplus moneys, collect rents and dividends, often buy shares or other securities and resell them, and yet the management of the estate is not, I think, to be regarded as engaged in business in the sense in which a trader, a merchant or a broker is engaged in business. The management of an estate is not the doing of business within the meaning of the law. A person .living on his rents and the profits of capital is not “ doing business ” at common law, because he reinvests his surplus or loans his capital wherever he can to his advantage.
I have been able to find no adjudications decisive of this matter and none have been cited to me. When our own law furnishes no precise authority for the solution of legal problems it is always well to look into that great fountain of modern rights and legal, principles, the Civil Law, and see what illustration, if any, it offers. While such an illustration would not in our system be authoritative on such a point as this now before me, it will be instructive, because it discloses the best and most highly scientific legal thought of all the ages known to us.
It is a curious parallel, worth mentioning, that the dealings of these Roman shareholders, 2,000 years ago, in shares of the public companies were ordinarily conducted in the forum which is only lately beginning to be recognized as having been among many other things a sort of Roman stock exchange or bourse. Cicero himself, as well as most of his friends, was much mixed up in the forum, as shareholders with these public companies, of one of which he admits that he was also counsel. But nowhere are Cicero .or his friends classed among the negotiatores. They were simply what in modern times in America are popularly known as “ capitalists ” or investors.
“ Capitalist ” has no legal meaning and it is used colloquially often in a wrong sense. In some provincial cities of this country it is not unusual to see gentlemen of inherited fortunes, never engaged in business of any kind, described in the city directories and local journals as “ capitalists.” I know of such instances.
That inexhaustible reservoir of juridical conceptions, the Roman Law, recognized two thousand years ago a distinction between “ capitalists ” who loaned their own money for their private account and bankers and other “ argentarii ” who acted as middlemen in making loans, keeping what was called “ tabernae argentariae,” or “ money shops,” where the public resorted, whereas the Roman capitalists kept no such shops and were not classed among the “ negotiatores or people of business. The people who kept tabernae argentariae, or money shops, were negotiatores, or engaged in business. It is very clear that in Roman Law a rich Roman two thousand years ago might have loaned and invested and reinvested her billions of sesterces at her private chambers, or private office, if you please, without any danger of being classed by the public authorities with the negotiatores, and accused of carrying on “ business,” provided she had not opened a taberna argentaría, or money shop, where the public could resort for transactions of their own. Now this the evidence before the New York appraiser shows that Mrs. Green never did. She kept no “open shop” or place of resort for the public. She made no transactions but her own, and in a legal sense such transactions were not her “ business ” but her private affairs, of no actual or lawful concern to the staté.
If a tax law does not expressly include property it cannot be taxed by implication. Taxing acts are construed strictly and when dubious against the state. Should this appeal be decided in favor of the state comptroller, I cannot see why citizens of other states who systematically speculate in brokers’ offices in the city of New York, of who loan their foreign money regularly to banks in this city, do not also come within section 220 of the Tax Law. If so, the tax law will either have to be amended or New York will soon cease to be the monetary centre of the United States. It may be that Mrs. Green selected a domicile where succession taxes would not molest her succession unduly, but that is no reason for subjecting her estate to a law which was not intended to cover operations like hers in the money centre of the United States. Should her succession be condemned in this instance it would be one of those unfortunate errors which the feebleness of humanity commits on occasions, and it would be disastrous to the wellbeing of the state.
The additional evidence submitted to the appraiser does not for the reasons stated, in my opinion, warrant a finding by the court that Mrs. Green at the time of her death was engaged in business in this state within the meaning of subdivision 2 of section 220 of the Tax Law. The order fixing tax will therefore be affirmed.
Order affirmed.