224 Mass. 516 | Mass. | 1916
This is an action by the tax collector of the town of Hardwick to recover a tax assessed to the defendant for the year 1911. The pertinent facts are that the defendant, a resident of Hardwick in this Commonwealth, together with one Monteagle, a resident of California, and one Wright, a resident of New York, was appointed an executor of and a trustee under the will of Calvin Paige, who was domiciled at the time of his decease in the city of New York. They were duly appointed to this trust by the appropriate court of the State of New York. They have not been appointed by the courts of this or any other State except New York. These executors, in accordance with the will, paid to themselves as trustees a legacy of $150,000, to be held during the life of Joseph C. Paige, also a resident of Hardwick, for his benefit. This trust fund was invested in intangible securities, a part of which are not subject to direct taxation in the State of New York, and a part of which are so subject to taxation, and as to this part a tax was paid in that State for the year 1911. So far as taxable the fund as a whole is there subject to taxation. All the securities, documents and other evidences respecting the trust at all times since the creation of the trust have been kept physically in New York in the exclusive custody and control of the trustee there resident, by concurrent assent of all the trustees. Under the law of the State of New York the trustees must act as a unit and all power possessed by them must be exercised by them as a body; and the trust fund still forms a part of the estate of the testator, and if the trust should fail for want of takers, the property would become vested in the Supreme Court of New York to be distributed
This statement of facts shows that in substance and effect, where one or more of several trustees is a resident of New York and the securities in which the trust is invested are kept physically in New York, the laws of New York have established a kind of custody in the courts of .that State for a trust fund administered as is the one at bar, and a domicil of the trust fund for purposes of taxation, with the trustee resident in that State.
The Massachusetts tax law apparently was not phrased with a view to the exact situation here presented. But in clause 7 of § 23, Part I of St. 1909, c. 490, the right of the Legislature to establish a domicil for an estate in process of settlement in the Probate Court is asserted by a provision to the effect that personal property of a deceased resident shall be assessed to the estate until after the appointment of an executor or administrator, and then to such executor or administrator for three years (unless sooner distributed and the statute complied with) “in the city or town in which the deceased last dwelt.” It would be a hard thing to say that a non-resident executor or administrator might be taxed lawfully for the same property at his domicil on the theory that the title to such personal property was in him. Seem
When there are several trustees, one or more of whom is domiciled in the State of origin of the trust, and the corporeal custody of the securities of the trust is with that trustee at his domicil, and the title of the trustees is joint and their powers must be exercised as a unit, there is no such several ownership in one trustee resident outside the State of the establishment of the trust, but resident in Massachusetts, as brings him within the scope of our tax law as to the trust property. St. 1909, c. 490, Part I, § 23. Under these circumstances he alone as resident of this Commonwealth does not hold the title as owner within the Commonwealth in such sense as to bring him within the terms-of the tax act. He cannot exercise ownership as a resident in this Commonwealth, but only by conjoint action with his fellow trustees, none of whom are resident here, as to a fund in substance in the custody of the courts of another jurisdiction. His ownership is not of such character as to bring the taxable domicil of the trust within the terms of our law.
The case at bar is distinguishable from Welch v. Boston, 221 Mass. 155, where all the trustees resided in Massachusetts and nothing appeared as to the law of the State where the trust was-established. It is also different from Bellows Falls Power Co. v. Commonwealth, 222 Mass. 51, where the owner of shares of corporate stock was held subject to taxation notwithstanding the-laws of the State of domicil of the corporation.
The tax in the case at bar is not assessed to the beneficiary and it is not necessary to consider that aspect of the tax law.
The present statute does not go to the length of expressing a clear intent to levy a tax upon the defendant in respect of the New York trust under the circumstances here disclosed. It is unnecessary to discuss the constitutional questions which in that event would arise.
Judgment for the defendant.
St. 1909, c. 490, Part I, § 23. “Fifth, Personal property held in trust by . . . trustee, the income of which is payable to another person, shall be assessed to the . . . trustee in the city or town in which such other person resides; if within the Commonwealth; and if he resides out of the Commonwealth it shall be assessed in the place where the . . . trustee resides; and if there are two or more . . . trustees residing in different places, the property shall' be assessed to them in equal portions in such places. ... If the ... trustee is not an inhabitant of the Commonwealth, it shall be assessed to the person to whom the income is payable, in the place where he resides, if it is not legally taxed to . . . trustee under a testamentary trust in any other State.”
Gallup v. Schmidt, 154 Ind. 196, 200. Commonwealth v. Peebles, 134 Ky. 121, 125. Goodsite v. Lane, 72 C. C. A. 281.