gress has seen fit so to deal with the trust. This entity, the trust, from another point of view consists of separate interests, the equitable interest in the res of the beneficiary" and the legal interest of the trustee. The legal interest of the trustee in the res is a distinct right. It enables a settlor to protect his beneficiaries from the burdens of ownership, while the beneficiary retains the right, through equity, to compel the legal owner to act in accordance with his trust obligations. The trustee as the owner of this legal interest in the res may incur obligations in the administration of the trust enforceable against him, personally.18 Nothing else appearing, the trustee is personally liable at law for contracts for the trust.19 This is the rule in Rhode Island.20 Specific performance may be decreed against him." Of course, the trustee when acting within his powers for the trust is entitled to exoneration

17 Brown v. Fletcher, 235 U. S. 589, 598–600; Blair v. Commissioner, 300 U. S. 5, 13.

18 Scott, Trusts (1939), pp. 487, 1469 et seq.; Williston, Contracts (1936) § 312; Bogert, Trusts and Trustees (1935) § 146.

19 Duvall v. Craig, 2 Wheat. 45, 56; Taylor v. Davis, 110 U. S. 330, 335: “A trustee may be defined generally as a person in whom some estate, interest, or power in or affecting property is vested for the benefit of another. When an agent contracts in the name of his principal, the principal contracts and is bound, but the agent is not. When a trustee contracts as such, unless he is bound no one is bound, for he has no principal. The trust estate cannot promise; the contract is therefore the personal undertaking of the trustee. As a trustee holds the estate, although only with the power and for the purpose of managing it, he is personally bound by the contracts he makes as trustee, even when designating himself as such."

Lazenby v. Codman, 28 F. Supp. 949; Prudential Ins. Co. v. Land Estates, 31 F. Supp. 845; Peyser v. American Security & Trust Co., 107 F.2d 625.

20 Roger Williams N. Bk. v. Groton Manufacturing Co., 16 R. I. 504, 17 A. 170.

21 Warren v. Goodloe's Executor, 230 Ky. 514, 520, 20 S. W. 2d 278, 281.

or reimbursement 22 and the trust res may be pursued in equity by the creditor for payment.2

23

The Supreme Court of Rhode Island considered the argument that the laws of the state afforded no benefit or protection to the resident trustee. Although nothing appeared as to any specific benefit or protection which the trustee had actually received, it concluded that the state was "ready, willing and capable" of furnishing either "if requested." A resident trustee of a foreign trust would be entitled to the same advantages from Rhode Island laws as would any natural person there resident. Greenough v. Tax Assessors, supra, 488, 47 A. 2d at 631. There may be matters of trust administration which can be litigated only in the courts of the state that is the seat of the trust. For example, in the case of a testamentary trust, the appointment of trustees, settlement, termination and distribution under the provisions of the trust are to be carried out, normally, in the courts of decedent's domicile. See Harrison v. Commissioner of Corporations, 272 Mass. 422, 427, 172 N. E. 605, 608. But when testamentary trustees reside outside of the jurisdiction of the courts of the state of the seat of the trust, third parties dealing with the trustee on trust matters or beneficiaries may need to proceed directly against the trustee as an individual for matters arising out of his relation to the trust. Or the resident trustee may need the benefit of the Rhode Island law to enforce trust claims against a Rhode Island resident. As the trustee is a citizen of Rhode Island, the federal courts would not be open to the trustee for such causes of action where the federal jurisdiction depended upon diversity. The citizenship of the trustee and not the seat of the trust or

22 Scott, Trusts, § 244 et seq. and § 268.

23 Scott, Trusts, § 267 et seq. See Ballentine v. Eaton, 297 Mass. 389, 8 N. E. 2d 808; O'Brien v. Jackson, 167 N. Y. 31, 60 N. E. 238.

the residence of the beneficiary is the controlling factor.24 The trustee is suable like any other obligor. There is no provision of the federal Constitution which forbids suits in state courts against a resident trustee of a trust created under the laws of a sister state. Consequently, we must conclude that Rhode Island does offer benefit and protection through its law to the resident trustee as the owner of intangibles. And, while it may logically be urged that these benefits and protection are no more than is offered a resident owner of land or chattels, permanently out of the state, the same reasons, hereinbefore stated on pages 492 and 493, apply that permit state property taxation of a resident owner of intangibles while denying a state power to tax similarly the resident's outof-state realty.

No precedent from this Court called to our attention indicates that the federal Constitution contains provisions that forbid taxation by a state of intangibles in the hands of a resident testamentary trustee. In Brooke v. Norfolk, 277 U. S. 27, the state property tax there invalidated, evidently as violative of the Fourteenth Amendment, was assessed to a life beneficiary, on a res, composed of intangibles, when both the testator and the trustee were residents of another state where the trust was administered. Safe Deposit and Trust Company v. Virginia, 280 U. S. 83, held invalid a state's tax on a trust's intangibles, actually in the hands of the nonresident trustee and not subject to the control of the equitable owner, because it was an attempt to tax the trust res, intangibles actually in the hands of a nonresident trustee. This was said to conflict with the Fourteenth Amendment as a tax on a thing beyond the jurisdiction of the taxing state.25 See also

24 Bullard v. Cisco, 290 U. S. 179, 190. See Memphis Street R. Co. v. Moore, 243 U. S. 299.

25 The power of a state to tax the equitable interest of a beneficiary in such circumstances was not presented. Id., pp. 92 and 95.

486

Opinion of the Court.

Graves v. Schmidlapp, 315 U. S. 657, 663, where the sovereign power of taxation was held to extend to a state resident who by will disposed of intangibles held by him as trustee with power of testamentary disposition under a nonresident trust. Nothing in these cases leads to the conclusion that a state may not tax intangibles in the hands of a resident trustee of an out-of-state trust.26

State courts construe their statutes according to their understanding of state policy and apply them to such situations as their interpretation of the statutory language requires. In so adjudging, they are the final judicial authority upon the meaning of their state law. It is only in circumstances where their judgments collide with rights secured by the federal Constitution that we have power to protect or enforce the federal rights. In adjudging the taxability under state law of a resident trustee's ownership of intangibles, without reliance upon the residence of settlor or beneficiary or the location of the intangibles, various conclusions have been reached under state law and without regard to the Constitution of the United States. They are pertinent to our problem only as illustrations of the different viewpoints of state law."

26 Goodsite v. Lane, 139 F. 593 (C. C. A. 6th), holds that a state property tax on a trustee's intangibles for the sole reason that he resides in the taxing state is invalid. It would seem this was so decided because of the Fourteenth Amendment. We do not think this case gives proper recognition to the state's power to tax the owner of the legal title to the res.

27 The state statute taxing property to the trustee validly applies to the resident trustee: Welch v. City of Boston, 221 Mass. 155, 109 N. E. 174; Harvard Trust Co. v. Commissioner of Taxation, 284 Mass. 225, 230, 187 N. E. 596, 598; Mackay v. San Francisco, 128 Cal. 678, 61 P. 382; Millsaps v. Jackson, 78 Miss. 537, 30 So. 756; McLellan v. Concord, 78 N. H. 89, 97 A. 552; Florida v. Beardsley, 77 Fla. 803, 82 So. 794.

The state tax statute is inapplicable to the resident trustee: Dorrance's Estate, 333 Pa. 162, 3 A. 2d 682; Commonwealth v. Peebles,

FRANKFURTER, J., concurring.

331 U.S.

Nor do we think it constitutionally significant that the Rhode Island trustee is not the sole trustee of the New York trust. The assessment, as the statute in question required, was only upon his proportionate interest, as a trustee, in the res. Whatever may have been the character of his title to the intangibles 28 or the limitations on his sole administrative power over the trust,29 the resident trustee was the possessor of an interest in the intangibles, sufficient, as we have explained, to support a proportional tax for the benefit and protection afforded to that interest by Rhode Island.30

MR. JUSTICE FRANKFURTER, concurring.

Affirmed.

In view of the dissents elicited by the Court's opinion, I should like to state why I join it.

Rhode Island taxes its permanent residents in proportion to the value of their property. The State imposes the tax whether its residents own property outright or

134 Ky. 121, 135, 119 S. W. 774, 778; Darrow v. Coleman, 119 N. Y. 137, 23 N. E. 488; Rand v. Pittsfield, 70 N. H. 530, 49 A. 88. Newcomb v. Paige, 224 Mass. 516, 113 N. E. 458, and Harrison v. Commissioner, 272 Mass. 422, 172 N. E. 605, declined taxation on the ground of comity and thus distinguished Welch v. City of Boston, supra, 272 Mass. 428-29, 172 N. E. 609.

28 Scott, Trusts, §§ 88.1, 103; Bogert, Trusts and Trustees, § 145. 29 Scott, Trusts, § 194; Brennan v. Willson, 71 N. Y. 502; Fritz v. City Trust Co., 72 App. Div. 532, 76 N. Y. S. 625, aff. 173 N. Y. 622, 66 N. E. 1109; In re Campbell's Estate, 171 Misc. 750, 13 N. Y. S. 2d 773.

30 The state courts have reached varying conclusions under their statutes: See People ex rel. Beaman v. Feitner, 168 N. Y. 360, 61 N. E. 280; Mackay v. San Francisco, 128 Cal. 678, 61 P. 382; McLellan v. Concord, 78 N. H. 89, 97 A. 552; Dorrance's Estate, 333 Pa. 162, 3 A. 2d 682; Newcomb v. Paige, 224 Mass. 516, 113 N. E. 458; Harrison v. Commissioner, 272 Mass. 422, 430–31, 172 N. E. 605, 609–10.