145 Minn. 412 | Minn. | 1920
The court below determined that certain share certificates held by Samuel Thorne, at his death, were subject to an inheritance or succession tax to the extent of 72.37 per cent of their taxable value. The executors of his estate appeal from the judgment, contending that no part or proportion of the shares is subject to the tax, while the state
The findings of fact were made upon the stipulations and admissions of the parties. The substance of those deemed material to the appeal may be thus stated:
Samuel Thorne, a resident of New York City, died there July 4, 1915, testate. The will was probated in New York and the appellants, all residents of that state, were duly appointed executors. At the time of death, Thorne owned 13,606 shares of “Great Northern Iron Ore Properties Trustees’ Certificate of Beneficial Interest,” hereinafter called beneficial certificates for short. They had been in his possession in New York since their issuance to him and were worth, on the stock market, $35.62 a share, at the time of his death. Their origin, in brief, was this:
The Great Northern Railway Company, a Minnesota corporation, had acquired many thousand acres of iron bearing ore in this state, together with other property not a part of its transportation business. Some eight subsidiary Minnesota corporations had been organized to operate mines and handling facilities upon and in connection with these mineral lands, and to deal in mines, mining leases and transact other business. There were also two foreign companies or corporations, formed to hold and operate similar properties and business in this state. All of the property held by the mining companies, apparently, belonged to the Great Northern Railway Company. The latter, realizing that mining and other industrial and commercial business, not directly connected with that of a common carrier, should be placed in other hands than its own, contrived the trust in which these beneficial certificates were issued. James J. Hill, the president of the railway company and its moving spirit, his son James N. Hill, and Robert I. Farrington had formed a partnership under the laws of Michigan to deal in mineral lands in Michigan, Wisconsin and Minnesota, and to take and hold bonds and stocks of all sorts. The name assumed was the Lake Superior Company, Limited. It was evidently designed to be a holding company. It held all the shares of stock of the various mining companies above referred to for the benefit of the shareholders of the railway company,
The trust agreement was executed and delivered in New York, but the shares of stock thereby transferred were delivered to the trustees at St. Paul, Minnesota, where they have ever since been kept. The president of the trustees had always lived in the city of St. Paul, as did also one other trustee, during the life of Mr. Thorne. Two of the trustees have resided in New York, where also is maintained an office for the
The first contention of the executors is that the state is foreclosed from claiming this tax by reason of the attorney general’s practical construction given the taxing statute. Numerous cases are cited as to the binding force given by courts to the construction consistently given for a considerable period of time to a statute by officials connected with its enforcement or required to discharge executive or administrative duties thereunder. State v. Moffett, 64 Minn. 292, 67 N. W. 68; State v. Northern Pac. Ry. Co. 95 Minn. 43, 103 N. W. 731; Musgrove v. Baltimore & Ohio R. Co. 111 Md. 629, 75 Atl. 245; Tyler v. Treasurer, 226 Mass. 306, 115 N. E. 300, L.R.A. 1917D, 633; In re Week’s Estate, 169 Wis. 316, 172 N. W. 732. We, however, note that the question here is not strictly one of construing the inheritance tax statute, but rather an ascertainment of facts to determine whether or not the beneficial certificates in this trust represent property rights within the jurisdiction of this state so that a succession tax may be exacted. The deliberate omission of the taxing authorities, up to the present time, to
The able counsel for the executors have exhaustively .considered the legal status of the holders of the beneficial certificates to the trust property and to the trustees under the instrument creating the trust. The origin of trusts was no doubt for the protection of the beneficiary so as to assure to him the income from the corpus of the trust and closing every avenue by which he, or others, might acquire, dispose of, impair or encumber the property itself. And the courts when dealing with trusts have, of course, adopted and applied principles of law which, as between the beneficiary, his creditors and his trustees, conserve the trust estate and attain the purposes of the trust. But it may be doubted whether the legal principles formulated and applied by courts in such matters should guide as rigidly when it comes to a contest by the state to impose a succession tax upon the decedent’s beneficiary interest in a trust. However that may be we think the determinative question here is the situs of the trust, rather than the legal nature of the interest the holder of the beneficial certificates has or may assert to the trust property. It may not be doubted that the shares held by Mr. Thorne represent property. They have participated in princely earnings, and entitle the holder ultimately to share in the vast properties represented by the shares of the mining companies constituting the corpus of the trust. No matter how contingent or uncertain, from a legal viewpoint, the interest represented by these beneficial certificates of Mr. Thome might be, they possessed a very substantial value on the stock market. A trust dealing with vast fortunes must have a home where its business is administered.
The outstanding facts which seem to us to fix the domicile of this trust in this state are these: The shares of the mining companies, the corpus of the tmst, have always remained here since the transfer to the trustees; the president and secretary of the trustees have always re
The only other state that could possibly claim to be the seat of this trust would be New York, and the only facts pointing to that conclusion would be the execution of the trust agreement there, the maintenance in New York City of transfer, registering and dividend disbursing offices, the keeping of funds on deposit in New York banks, the residence there of two trustees, and meetings of the trustees held in that state. But it is readily appreciated that the maintenance of the offices mentioned in New York City is to facilitate dealings on the stock market in these certificates and other financial transactions, the same as like offices are there maintained in the same building by the Great Northern Railway Company. And no doubt convenience dictated the meetings in New York City by the trustees, and the execution there of the trust agreement, the trustees here residing, actively engaged as officers of the railway company and the mining companies, would naturally find frequent visits to New York, the financial center, necessary, while business journeys to the west by the New York trustees would likely be rare. We entertain no doubt that, at any time while an owner, Mr. Thome could have come into the courts of this state for any relief he might have shown himself entitled to in respect to his interest in this trust. The case of Venner v. Great Northern Ry. Co. supra, was disposed of on the facts admitted by the demurrer to the complaint, and is not to be construed as holding, as a matter of law that the certificate holders cannot compel by appropriate suit a distribution of accumulated earnings. Had there been but one trustee, either a person domiciled in this state
The proposition that a trust has a situs so as to afford a basis for claiming an inheritance tax is not entirely novel, although courts in determining the location may not always stress the same factors. Varied importance is given to the residence of the trustees, the residence of the settlor, the place of the administration of the trust, and the location of the trust property. Professor J. H. Beale, in an article in the Harvard Law Eeview for April, 1919 [Vol. 32, page —], arrives -at the conclusion that a succession tax is payable at the place of the administration or seat of the trust. The cases cited by him may not be directly in point, but have some bearing. In re Cigala’s Settlement Trusts, 7 Ch. Div. 351; In re Douglas Co. v. Kountze, 84 Neb. 506, 121 N. W. 593. See also Peabody v. Treasurer, 215 Mass. 129, 102 N. E. 435.
Having reached the conclusion that the trust to which these beneficial certificates attach has a location or situs within this state so as to give jurisdiction to exact a succession tax when the holder of the trust certificates dies, it follows that no reduction should be made because some of the shares constituting the corpus of the trust are shares of stock in foreign corporations. The trustees of a trust, having a domicle within the state where the principal part of the administration of the trust is conducted and the corpus of the trust is kept and controlled, should be regarded for succession tax purposes as if constituting a domestic concern or corporation.
On the state’s appeal the judgment is reversed and the case is remanded with direction to amend the conclusion of law in the findings and enter judgment in accordance with this opinion.