133 Minn. 117 | Minn. | 1916
Lead Opinion
Francis Edward Ward died on June 6, 1913, a resident of Chicago, Illinois. Fie was the owner of registered bonds of the Great Northern Railway Company amounting to $50,000. They were in his possession in Chicago. The railway company is organized under the laws of Minne
1. The provisions of the inheritance tax statute material upon this appeal are as follows:
“A tax shall be and is hereby imposed upon any transfer of property, real, personal or mixed, or any interest therein, or income therefrom'in trust or otherwise, to any person, association or corporation * * * in the following cases:
* * * (2) When a transfer is by will or intestate law of property within the state or within its jurisdiction and the decedent was a nonresident of the state at the"time of his death.” Laws 1905, p. 427, c. 288, § 1, as amended by Laws 1911, p. 516, c. 372, § 1 (G. S. 1913, § 2271).
In State v. Probate Court of St. Louis county, 128 Minn. 371, 150 N. W. 1094, L.R.A. 1916A, 901, the right to impose a succession tax received exhaustive consideration. It was held that a promissory note made by a Minnesota corporation, not appearing to be subject to jurisdiction out of the state, to a resident' of Pennsylvania, was upon his death subject to a succession tax in Minnesota. ■ We start, then, with' the law settled that a promissory note made by a corporation of this state, not subject to jurisdiction elsewhere, is subject to a succession tax in this state, though the owner is a nonresident. The appellants seek to distinguish the case at bar from the one cited, because it involves a corporate bond instead of a promissory note, because the bond is registered
Jurisdiction of the railway company can be had outside of Minnesota in each of the seven states through which its lines pass and in which it is authorized to do business and in New York where it has an office. Because of this the appellants urge that there is no situs in Minnesota upon which to base jurisdiction to lay a succession tax. ^That it is necessary for the nonresident creditor of a resident debtor to come into the state and invoke its laws and use its courts to enforce his obligation is a fact of importance in the determination of the right of the state to impose a succession tax; and indeed where the security holder is a nonresident and the security is not physically within the state it is the one essential fact consciously or unconsciously accepted in the cases where a succession tax is sustained as vital to jurisdiction. ^Tliis is the thought in Blackstone v. Miller, 188 U. S. 189, 23 Sup. Ct. 277, 47 L. ed. 439, affirming a decree of the surrogate’s court which was affirmed in 69 App. Div. 127, 74 N. Y. Supp. 508, and 171 N. Y. 682, 64 N. E. 1118, where the court says: “If the transfer of the deposit necessarily depends upon and involves the law of New York for its exercise, or, in other words, if the transfer is subject to the power of the state of New York, then New York may subject the transfer to a tax. * * * But it is plain that the- transfer does depend upon the law of New York, not because of any theoretical speculation concerning the whereabouts of the debt, but because of the practical fact of its power over the person of the debtor.
* * * What gives the debt validity? Nothing but the fact that the law of the place where the debtor is will make him pay. It does not matter that the law would not need to be invoked in the particular case. * * * So again, what enables any other than the very creditor in proper person to collect the debt ? The law of the same place.
* * * Power over the person of the debtor confers jurisdiction, we repeat. And this being so we perceive no better reason for denying the right of New York to impose a succession tax on debts owed by its citizens than upon tangible chattels found within the state at the time of the death.”
In the case before us there is no necessity of the owner coming to
A like conclusion was reached in Matter of Gordon, 186 N. Y. 471, 79 N. E. 722, 10 L.R.A. (N.S.) 1089. There it was sought to impose a transfer tax upon the proceeds of an insurance policy issued by a corporation of New York to a resident of New Jersey who died there. The policy was payable in New York and was kept by the insured in New Jersey. By the laws of New Jersey the insurance company was subject to jurisdiction there. Reliance was again placed on Blackstone v. Miller, 188 U. S. 189, 23 Sup. Ct. 277, 47 L. ed. 439, in support of the tax; and in referring to it the court said that the “holding was unequivocally based upon the conditions disclosed in that case, which were that the" debtor resided within the state and that the creditor must come there and take advantage of the laws of the state for the purpose of enforcing his claim.” It differentiated the facts before it from the facts in the Blackstone case, because the insurance company could be subjected to jurisdiction in New Jersey as well as in the state of its creation, while in the Blackstone case jurisdiction would be acquired of the corporation debtor only in the state under the laws of which it was organized; and it held, because of this distinction, that the proceeds of the policy were not subject to a transfer tax in New York.
The Massachusetts case and the New York case cite a number of authorities, unnecessary to be considered here, supporting the conclusion which they reach. The principle of these two cases is determinative in favor of the contention of the appellants, and, applying it, we hold that the bonds are not subject to a .succession tax in Minnesota because the debtor is incorporated there and has there its principal offices, it being subject to jurisdiction in other states having property sufficient to satisfy them. From what is said it is not to be understood that we hold that the accidental fact that a debtor is found out of the state of his domicile, and is subject to jurisdiction there, relieves his obligation in the hands of a nonresident owner from a succession tax to which otherwise it would be subject. What we have said is in view of the facts before us showing personal jurisdiction of the corporate debtor in other states in which it is authorized to do business.
2. In Massachusetts and New York, in the cases cited, there was no
Judgment reversed.
Dissenting Opinion
(dissenting).
In State v. Probate Court of St. Louis County, 128 Minn. 371, 150 N. W. 1094, L.R.A. 1916A, 901, it was decided that the state is entitled to a succession tax on debts and promissory notes held by a nonresident decedent against a domestic corporation. Blackstone v. Miller, 188 U. S. 189, 23 Sup. Ct. 277, 47 L. ed. 439, is authority for the proposition that power over the debtor confers jurisdiction upon the state to impose a succession tax on the debt. I am unable to discover a satisfactory reason for distinguishing between debts in the enforcement of this tax. A registered bond should have no preference over a promissory note or a book account. Nor should the right to exact the tax depend on the contingency of the debtor having property or security outside this state from which the debt
Dissenting Opinion
(dissenting).
I agree with Justice Holt.
On July 7, 1916, the following opinion was filed:
In proceedings for the collection of an inheritance, the state acts in its governmental capacity, not in its proprietary interest, and is not liable for costs or disbursements when the proceeding fails. The clerk’s taxation of costs against the state in this proceeding is therefore reversed.