*1 have occasion we do not In of these considerations view corporation “one-man” legitimacy determine the of creditors.28 claims against the a bulwark Ap- Circuit Court Accordingly the that of the District affirmed. reversed pеals
Reversed. THE OF STATE TREASURER PEARSON, STATE EXECUTORS. McGRAW OREGON, OF al., et 4, 1939. 16, 1939. December Argued November 69. No. Decided this'point District Court said: “An 28 On examination of the history carefully shows disclosed here of a deliberate and facts attempt Splint of Scott Litton and Dixie planned Coal just payment Company speak of a debt. to avoid of Litton and Splint Company reality because are in Dixie Coal same. law, experience all the there has never prolific been more corporatiоn. breeder of than the one-man fraud It is a de favorite escape personal liability. vice for the This case another illustrates frequent corporate entity, whereby use of fiction the owner corporation, through сomplete it, control over undertakes to gather to himself all of its to the assets exclusion of its creditors.” *2 Moore, Willis Assistant Attorney
Messrs. General of Dickinson, and Dean H. with Oregon, whom Mr. I. H. Winkle, was on Attorney General, Van brief, peti- tioner. Rockwood, with
Mr. Fletсher whom Mr. Charles E. brief, for respondents. McCulloch Douglas Justice delivered Mr.
Court. died
Hayes, respondents’ decedent, testate in 1936 and was at the time death a resident of his and domiciled years Oregon. in earlier when he had resided in the he in рlaced possession middle west of an Illinois trust various bonds company and stocks, other intangibles, his in company agent which trust acted as collecting and income on principal those securities and in the invest- his ment of funds. When decedent a established domicile ; in in 1933, he that arrangement .continued with the Illinois company, trust with those Illinois, securities always physically present never in Oregon. August 8, 1935, about six months before death, decedent’s he directed the Illinois trust company liquidate to sell sufficient his bonds held under
lO rH co sum Illinois to arrangement agency procure which, together with checking cash balances account equal company, $450,000 trust would purchase therewith, his agent, as federal resеrve notes of the face $450,000. August amount of Between 1935 and the Illinois 12, 1935, trust with dece- company complied directions1 August pur- dent’s and prior federal $450,000 chased them in notes and held agent days. Illinois for decedent for few August On 15, 1935, decedent executed agreement company trust trust under which the Illinois designated trans- trustee and to it as That ferred trustee the federal reserve notes. designated trust was for benefit of relatives certain *3 in- and irrevocable. Under it decedеnt retained held company terest or whatsoever. The trust agreement federal reserve notes the trust those under August to time after for about five Then from time days. re- the federal used 19, 1935, the Illinois trust company agreement, the trust terms оf to the notes, pursuant serve for ihe property personal other and purchase to bonds trust.2 of the account company open market the trust in the bonds the sale 1 On August 12, 1935, de $176,062.01. On account decedent’s
realized for $183,- company a demand note from trust borrowed cedent checking account balance in his had decedent that date 937.99. .On funds $90,000. so ob With company in excess with the trust $450,000 of federal reserve purchased company trust tained the August 12,1935, ánd Between notes mentioned. open market decedent, sold in directions of company, on trust proceeds and as agency account it in the held bonds additional note. That it, paid off the demand received sales those August 29, 1935. еntirely paid on note was 2 was ever acquired the trustee owned thus property of the None acquire any purchase bonds did not or decedent; trustee constituted any time which at assets or other arrange under agent eаrlier by the trustee held ment.
316 had
Admittedly, to tax but for the alleged in the Fourteenth prohibition Amendment, for the question imposed a tax on intangibles as well statute tangibles passed deed or made con templation grantor.3 of the death of thе But Su Court of preme that constitutional held present prohibition was since neither or securities cash used purchase to federal reserve notes nor the in Oregon always notes themselves were ever but Though admitting Illinois. would havе by Oregon been taxable circumstances, such Blodgett Silberman, court in reliance on the federal concluded tangibles. notes were And since decedent had retained them in Illinois for a days prior August 15, few to 1935, without any intention bringing them to had Oregon, acquired a so-called situs in business Illinois which constitutionally prevented Oregon from exacting tax for their transfer.4 And though conclusion was reached admittedly the transfer agreement of the notes under the August 15, 1935, was contemрlation made in of death. granted certiorari state, “All any within the interest therein, belonging whether to the inhabitants of this or not, tangible intangible, pass or which shall or by deed, vest ... grant, bargain, gift, or or as an advancement or division of or her estate made of the death the grantor, ... person persons, any otherwise, ... in trust or . . . shall be and subject specified to tax rate hereinafter at the in section,10-603, paid *4 to the treasurer of the state for the use of state; . .” 1930.) (§ 10-601, O. C. 424, “86 2d P. 2d P. 766. It seеms clear that Su preme reached this Court reliance on the Fourteenth Amend the decisions of this Court ment and thereunder. We do have, not therefore, a case where merely the state court was construing its it is a case where not statute nor clear not it was doing Tax Cott, State Commission v. Van more than that. Cf. 306 U. S. 511.
CO
importance
question
because of the
of the constitutional
alleged
with
probable
prin
involved and of an
conflict
McCanless,
such decisions
ciples underlying
Curry
v.
of ’ it the Federal was deprived the statute not of Constitution. various of we believe that
On facts case constituting but must be сonsidered steps in series transfer transaction —a integrated one indivisible death. And of intangibles of the series was step each in' though we reach this result concealed. For camouflaged or though real and none federal acquisition basically intangibles, sale agreement of transfer under the and their Groman, Cf. v. interdependent. Revenue, 82; 302 U. S. Helver Internal Commissioner of 454, 458. From decedent’s Bashford, 302 U. S. ing v. of steps view, completion series point to utilize program consummation necessary for designated for certain §450,000 provide of his estate final family.5 Any step short of the of his members The mere done it. would transfer of' acquisition and the the federal reserve significance apart functional or business had no *5 only in relation meaning significance to especially made third conclusion evident step, it sequence say answer Hence, close of events. is no to two were irrevocable but steps because the first not in necessary could be third was recalled, step not one revocability For series. that is as immaterial as is any in plan donor’s make a to at any prior death moment to its Admit consummation. tedly decedent had such a on purpose the transfer of notes. To hold that such on purpose present not of the would be to isolate one give of the total significance transaction and to meaning utterly in inconsistent the fact tangibles sold purpose acquiring for the the notes which, in turn, placed were to be an irreyocable trust. Therefore we need not consider the nature of fed eral reserve that posture of the case their taxability as such ánd isolation frоm whole transaction is not in issue.
Hence hold to there ais constitutional barrier sought the tax imposed to be would be make a fetish of form. It would make the principles of decisions of this Court on the constitutional to tax devoid аny or function from apart a ritual tax avoid ance. Cf. Minnesota Tea Co. Helvering, v. 302 U. 609; S. Moore, Shotwell 129 U. 590. Questions v. of due , not process are to be “narrowly treated pedantically slavery phrases.” to forms or v. Wells, Burnet 677-78. Accordingly, the transfer was taxable on the authority McCanless, Curry supra, and related cases. For constitutionally the “within state” of since that dependent physical location of the the state but on control over the owner.
CO CO Supreme The re- *6 cause is remanded to for further versed and.the that court opinion. not inconsistent with this proceedings
Reversed, McReynolds of the that the Mb. Justice is should be judgment below affirmed. Stone:
Me. Justice ground I of on the concur the reversal by taxаtion nothing prevents in the Constitution that of federal reserve notes by of a its citizen gift elsewhere. located in the circumstances of
While do that question constitutionally tax could, advised, if so case a state than the purpоse other citizen for action taken its is, I question think, taxing statutes, no such of its evasion of it seems at most Discussion by the record. presented of de- duty and not to relieve us be academic question by any pos- which could only federal ciding. the by record, be raised namely, the sibility said to of of gift taxation precludes the Constitution physical they of fact that merely because banknotes state. are without the located gift tha^ the of federal re- arriving the cоnclusion at not taxable, the state was notes located outside
serve necessarily construed the Ore- Supreme Court gifts of “all property tax on imposes which statute, gon , tangible . . whether of the state jurisdiction within the banknotes that court has said intangible.” The their state not within the because were the acts elsewhere, situs an having property acquisition tax avoiding the for taxation not reached situs were extra-territorial rule more than anything did court If thе law. statute, by own terms, its not extend to the ..did gift taxation of the notes because located state, outside the it held that the Fourteenth Amend- ment physical withholds, because fact from the state, over which the taxing statute asserts.
Petitioner asks us holding to determine whether that correct. He is entitled to an answer. do not rightly giving that, avoid the answer saying by some than that review, statute other the state could con- stitutionally tax its citizen for his in avoiding action making in a form tax, by If hypothesis beyond taxing power. the state has its statute undertaken to lay gifts a tax on *7 outside the state without banknotes more —and arewe if without it has not —no purpose is served to the state it could by saying that have reached the same route, which, another under its laws, does not appear open to it. of opinion
As am there is nothing I the Con- compel stitution to treat federal reserve notes for tax chattels were purposes treated Frick v. Pennsylvania, 268 U. S. and as has been Silberman, advanced, Blodgett even 277 U. 1, 18, Missouri, cf. Baldwin v. view, different 281 U. S. reversed, should, 586, 591, think, be upon rather upon than ground theory permissible apparently Oregon’s of which legislation, tax laws do avail. agrees with my views as to Frankfurter
Mr. Justice to tax these federal Oregon’s power but sustains ground record taken in opinion. the Court’s notes emphasized 1935 transfer. That from the August gelations legal gave created no 'and rise here because interfering continuing with decedent’s rights to no vested transactions, Taken as isolated disposition. Supreme the treatment Court of is in accord with 5 This “plan” compelled Hayes’ plan,” felt of “Dr. principles separate steps by of decisions divide into dealing situs under the Fourteenth Amend with business this Court Alabama, 294 600. Patterson ment. Cf.