138 A. 520 | Conn. | 1927
We had occasion to pass upon the validity of the sections of the General Statutes under which the tax in question was laid in Bankers Trust Co.
v. Blodgett,
General Statutes, § 1184, provides: "All notes, bonds and stocks, not issued by the United States, moneys, credits, choses in action, . . . belonging to any resident *531
in this State, shall be set in his list in the town where he resides at their then actual valuation." The statute has been in existence substantially in this form for nearly a century. In its earlier form it specifically provided that debts secured by mortgage must be set in the list of the owner. The present form of the statute includes in its general terms debts secured by mortgage. The statute was intended to cover all classes of intangible property, and that construction has been reflected in the practice in this jurisdiction and in the decisions of this court. We are asked to determine whether our statute providing for the taxation in Connecticut of bonds and mortgages secured by real estate in New York which are executed by a resident in New York and are owned by one domiciled in Connecticut is a valid exercise of the taxing powers. A like question arose in Kirtland v. Hotchkiss,
We subsequently held, in Bridgeport Projectile Co.
v. Bridgeport,
The appellants assert that our holding in Silberman
v. Blodgett, supra, goes further than the United States Supreme Court has gone. We find many instances in which that court has accepted the principle quoted from the opinion in State Tax on Foreign-held Bonds,supra, and in no instance has it ever disapproved of it. We cite some of these. In New Orleans v. Stempel,
We rest upon the oft-cited passage from the notable opinion of Mr. Justice Field in State Tax on Foreign-heldBonds, supra, pp. 320, 324: "To call debts property of the debtors is simply to misuse terms. . . . Their debts can have no locality separate from the parties to whom they are due. . . . But other personal property, consisting of bonds, mortgages, and debts generally, has no situs independent of the domicile of the owner, and certainly can have none where the instruments, as in the present case, constituting the evidences of debt, are not separated from the possession of the owners." Counsel for the appellants treat this case as a practically overruled case. They find in one opinion a statement that this case has been cut down to its true basis by subsequent opinions. We think the opinion in its main theme is as sound authority as when written and that it has always been regarded by the courts as a leading case. The constant citation of this case by its own court, as well as this language from Mr. Justice Peckham's opinion in Buck v. Beach,
In Fidelity Columbia Trust Co. v. Louisville,
But whether or not the mere presence of specialties or negotiable private paper in a jurisdiction other than that of its owner gives that jurisdiction the right to tax it, this will not prevent the jurisdiction of the owner also taxing it, as the authorities we shall cite show, or unless it is otherwise provided by statute. Since the State Tax on Foreign-held Bonds decision, which held that intangibles have no situs independent of the domicil of the owner, a number of decisions have established the "business situs" theory, which gives the intangible a situs in a jurisdiction other than that of its owner when it is a part of a business which the owner is there conducting, or the intangible is being so used as to give it a business situs there. Cooley on Taxation, Vol. 2 (4th Ed.) § 465, says: *538
"What will constitute a business situs is not susceptible of precise definition." It means "a situs in another State where a nonresident is doing business through an agent, manager or the like, in which business and as a part thereof business credits, such as open accounts, notes, mortgages, deposits in banks, etc., are used and come within the protection of the State; . . . but the most common application of the rule is where a resident of one State has an agent in another State who loans money of the nonresident, more or less as a regular business, and takes care of the collections and reinvestments, in which case the notes, mortgages, etc., taken by the agent are held to be subject to taxation although the owner is a nonresident." The taxation of intangibles in a jurisdiction not that of the owner has frequently been sustained upon the "businesssitus" theory. Bristol v. Washington County,
The mere presence of the specialty or negotiable paper in the jurisdiction other than that of the owner will not be a factor in determining the right of that jurisdiction to tax the intangible. Nor will the fact that it was in the hands of an agent as custodian, or for the purpose of collecting the interest thereon, give *539
it a business situs there. But if it be in the hands of "an agent of the owner for the purpose of collection or renewal, with a view to new loans and carrying on such transactions as a permanent business," it will have a business situs while in the hands of the agent for these purposes. State Board of Assessors v. ComptoirNational D'Escompte,
The stipulated facts show that the bonds and mortgages of Mr. Luke were in the hands of attorneys in New York, who merely collected the interest and instalments on the principal and remitted the same to him. This did not give them a business situs in New York for taxation. If the attorneys had had authority to invest and reinvest the principal in addition to the authority they in fact had, the bonds and mortgages would have had a "business situs" in New York; they would have constituted a part of a business. Intangibles which have a business situs in a jurisdiction other than that of the owner and so may be subject to tax *540
there, remain subject to taxation in the jurisdiction where the owner is domiciled. Fidelity ColumbiaTrust Co. v. Louisville,
The second point advanced by the appellants — that even if these bonds and mortgages are held to be intangible personal property, their taxation by Connecticut is a taking of property without due process of law — is disposed of in the recent case of Cream ofWheat Co. v. Grand Forks,
The third point discussed by the appellants — that Connecticut had no power to impose an ad valorem tax on these bonds and mortgages during the lifetime of this decedent, since the tax commissioner was without power to impose this penalty tax unless the property it sought to tax was taxable by the State of Connecticut or by the town of Greenwich, in which the decedent resided during his lifetime — has necessarily been determined in our consideration of point one. The bonds and mortgages were intangible property and their situs the domicil of the owner. The appellants' argument rests upon the proposition that these bonds and mortgages are tangible personal property and taxable where physically situated. To reach this conclusion, Kirtland v. Hotchkiss, supra, must be overruled, specialties as such held to be tangible personal property, and the doctrine of Union RefrigeratorTransit Co. v. Kentucky, supra, and Frick v. Pennsylvania, *541
The limitation of the taxation of specialties or instruments evidencing the existence of the indebtedness to the place where they are physically located, without reference to whether they are used there in the conduct of a business, "is unsound both in law and economics."
The last point urged by the appellants is that a statute of Connecticut has exempted these bonds and mortgages from ad valorem taxation. General Statutes, § 1184, under whose authority the State imposed this tax, the appellants claim is limited in the imposition of the tax by § 1196 as amended by Chapter 149 of the Public Acts of 1923, which reads: "The list of any person need not include any money in any savings bank or in the savings department of any bank or trust company or any other property situated in another State, when it shall be made satisfactorily to appear to the assessors that the same is fully assessed and taxed in such State, to the same extent as other like property owned by any citizen of such State; but the provisions of this act shall not apply to moneys loaned by residents of this State to any person out of this State, as money at interest." There is nothing in this record which has made it, or ought to have made it, satisfactorily to appear to the assessors of Greenwich that these bonds and mortgages were fully assessed and taxed in New York, assuming these securities to be situated in that State. The section expressly exempts from its provisions "moneys loaned by residents of this State to any person out of this State, as money *542 at interest," which covers the case of these bonds and mortgages. Finally, the limitation of the statute only applies to "any other property situated in another State" such as it has before described, money on deposit. The bonds and mortgages do not fall within that class of property, and furthermore have no situs in New York. The bonds and mortgages were not exempt from taxation under § 1196.
We answer question one, no; and questions two and three, yes.
In this opinion the other judges concurred.