145 Minn. 155 | Minn. | 1920
Emery Griggs died a resident of Minnesota and his last will and testament was duly admitted to probate in the probate court of Ramsey county. By writ of certiorari the judgment of that court, determining the amount of inheritance tax due from his legatees, is brought before this court for review. The only question presented is whether the transfer by will of two items of property possessed by Mr. Griggs at the time of his death is subject to the inheritance tax of this state. One of these items is a promissory note, executed by a resident of the state of New Mexico, and secured by a mortgage on real estate within that state. The other is an executory contract for the sale of a tract of land in the state of Mom tana, executed by Mr. Griggs, while a resident of Montana, to a resident of the state of Illinois, and which obligated the vendee to pay the purchase price of the land and gave him the right to the possession of it.
Ancillary probate proceedings have been instituted in the state of New Mexico, and the note and mortgage- are inventoried in those proceedings. Ancillary probate proceedings have also been instituted in the state of
It is conceded that the transfer of the New Mexico note and mortgage would be subject to the' tax of this state, except for the fact that the decedent had bought other real estate in the state of New Mexico, on the purchase price of which he owed an amount exceeding the amount of this note. The executor contends that the indebtedness incurred by the purchase of the New Mexico land should offset the credit represented by this New Mexico note.
Although the record does not disclose the manner in which the decedent had obligated himself to pay for the New Mexico land, yet, as the executor, in his brief, states that this liability was secured by a mortgage on the land and this statement is not questioned, we may assume that such is the fact. The land being in the state of New Mexico, its transfer was taxable only by that state, and was not taxable by the state of Minnesota, although it was owned by a resident of Minnesota. See cases cited in note in Ann. Gas. 1915A at page 169. For the purpose of levying an inheritance tax, the value of real estate is measured by the value of the decedent’s interest therein, and the value of this interest is to be determined by deducting from the value of the land the amount of the encumbrances thereon. In re Sutton’s Estate, 3 App. Div. 208, 38 N. Y. Supp. 277, affirmed on opinion below, 149 N. Y. 618, 44 N. E. 1128; McCurdy v. McCurdy, 197 Mass. 248, 83 N. E. 881, 16 L.R.A. (N.S.) 329, 14 Ann. Cas. 859; In re Fox’s Estate, 154 Mich. 5, 177 N. W. 558.
- The inheritance tax is imposed on the clear value of the property transferred. If the encumbrances on the real estate were not deducted from the value of the land, a state which only had jurisdiction of encumbered land would collect a tax on a higher value than passed by its laws, and the person to whom such land passed would pay a tax on a higher value than he received. Where the personal property and the real estate are in the same jurisdiction, and pass in equal proportions to the same per
To the same effect are the following: City of Marquette v. Michigan I. & L. Co. 132 Mich. 130, 92 N. W. 934; Rheinboldt v. Raine, 52 Oh. St. 160, 39 N E. 145; Griffin v. Board of Review, 184 Ill. 275, 56 N E. 397; In re Assessment of Boyd, 138 Iowa, 583, 116 N. W. 700, 17 L.R.A. (N.S.) 1220.
In this connection it is proper to note that our statute imposing a mortgage registry tax enacted long after the decision in the Rand case provides:
“An executory contract for the sale of land, under which the vendee is entitled to or does take possession thereof, shall be deemed, for the purposes of this act,- a mortgage of said land for the unpaid balance of the purchase price.” G. S. 1913, § 2301.
The cases above cited show that the interest of the vendor under an executory contract of sale has frequently been held to be personal property for the purpose of taxation under the general tax laws. While it would seem that the character of such an interest must haye been involved in many cases arising under the inheritance tax laws, we find very few in which it has been considered or determined.
The executor cites McCurdy v. McCurdy, 197 Mass. 248, 83 N E. 881, 16 L.R.A. (N.S.) 329, 14 Ann. Cas. 859. In that ease the Massachusetts court held that the doctrine of equitable conversion ought not to be invoked to subject property to taxation, and it would seem to follow that, as the vendor under an executory contract of sale retains the legal title, his interest thereunder would be deemed to be real estate in Massachusetts, but no such contract was involved or passed upon in that case.
The executor also cites several New York cases. The question seems not to have been passed upon by the New York court of appeals, but the prior decisions in that state are reviewed in the Matter of Bosharffs Estate, 107 Misc. 697, 177 N. Y. Supp. 567; Id. 188 App. Div. 788, 177 N. Y. Supp. 574, decided July 1, 1919, by the appellate division of the supreme court, and it was held that the interest of a nonresident decedent under an .executory contract, made by him as vendor, for the sale of land located in New York, was personal property, and for that reason was not subject to an inheritance tax in the state of New York.
In State v. Rand, supra, where both the real estate and domicile of the vendors was within this state, it was held that the interest of the vendors under the contract was taxable as personal property, and we see no reason why the same rule should not apply in the present case, although the land is located in Montana, especially as it is stipulated that the laws of Montana are the same as our own. The state unquestionably has power to impose a succession tax on the transfér of any property upon which it can impose a tax under the general tax laws, and the language of our statute imposing the succession tax indicates that the legislature intended to tax everything which it has the power to tax. State ex rel. Graff v. Probate Court of St. Louis County, 128 Minn. 371, 150 N. W. 1094, L.R.A. 1916A, 901.
While the imposition of a tax on this property by both Montana and Minnesota will result in double taxation, such results frequently arise under the inheritance tax laws. Where the domicile of the decedent is in one jurisdiction and the situs of the property in another, both have power to exact a tax. State ex rel. Smith v. Probate Court of Ramsey County, 124 Minn. 508, 145 N. W. 390, 50 L.R.A.(N.S.) 262, Ann. Cas. 1915B, 861; State ex rel. Graff v. Probate Court of St. Louis County, 128 Minn. 371, 150 N. W. 1094, L.R.A. 1916A, 901; Gleason and Otis, Inheritance Taxation (2d ed.) 25, and cases there cited.
Where the power to tax exists the extent to which it shall be exercised rests exclusively with the legislature and is beyond the control of the courts. Our statute imposes the tax on all transfers by will or intestate law, and makes no exception in favor of those transfers which may be subject to a like tax in another jurisdiction, and the courts can make no such
The judgment of the probate court will be modified to conform to the views herein expresed.