§ 219. Mortgages on Real Estate.

§ 220. Partnership Interests.

§ 221. Interest in Real Estate Trust Association.

Sec. 213. In General.

Choses in action have their situs for purposes of the inheritance tax at the domicile of the creditor1 and not at that of the debtor,2 or where it has a place of business. The fact that in the inventory the debtor is described as a banker who does business in New York cannot vary the result, where no pass book or voucher was ever delivered, and it does not appear that the decedent ever drew checks upon the account or that it was to be repaid otherwise than upon oral demand.4

The choses in action of a resident are taxable at his domicile though physically out of the state. Promissory notes, bonds and mortgages belonging to a resident of New York, which at the time of the testator's death were in the hands of his agent in Michigan, are taxable under the statute of 1885, chapter 483, as amended by the statute of 1891, chapter 215,5 although the tax has been held in some cases as dependent on the physical location of the securities.6

1 Intangible choses in action held by a non-resident in her possession at the date of her death in New Hampshire, where she resided, are not taxable under the Iowa collateral inheritance tax where the debtor was a resident of Iowa. The court holds that the situs of the choses in action attaches to the owner, that any debt has its situs at the residence of the creditor. The court remarks that Bridges v. Griffin, 33 Ga. 113, is the only case it has been able to find which holds that the residence of the debtor fixes the situs of the property. Gilbertson v. Oliver, 129 Iowa 568, 105 N. W. 1002, 4 L. R. A. N. S. 953. See, however, In re Joyslin, 76 Vt. 88, 56 A. 281. Rights in certain unsigned bonds, see ante, s. 199, n. 3.

2 Citizens Bank v. Sharp, 53 Md. 521. Kintzing v. Hutchinson, Fed. Cas. 7834. Allen v. Philadelphia Sav. Fund Soc., Fed. Cas. No. 234.

The essential fact which alone permitted the imposition of an inheritance tax at the domicile of the debtor in certain cases was the fact that the creditor in each one of them was under the necessity of going to the domicile of his debtor for protection and collection of his claim, and this appeared in Blackstone v. Miller, 188 U. S. 189. In re Houdayer, 150 N. Y. 37. In re Clinch, 180 N. Y. 300. In re Gordon, 186 N. Y. 471, 474, 79 N. E. 722, 10 L. R. A. N. S. 1089, affirming 114 N. Y. App. Div. 202, 99 N. Y. Suppl. 630.

The court notes the contention of the state treasurer that because debts owned by a non-resident against a resident of Massachusetts can only be enforced by the aid of Massachusetts' courts it ought to hold they are property within the jurisdiction of the state; but the court does not decide this contention. v. Stevens, 207 Mass. 368, 93 N. E. 586.

Kinney

The contrary result has been reached in Vermont. The testator, a resident of Vermont, died, leaving debts due to her from non-residents of Vermont; and the court holds that these debts are not to be included in fixing the amount of the estate subject to an inheritance tax under Vermont statute, 1896, c. 46. The act applies to "all property within the jurisdiction of this state." The court remarks that this must mean within its probate jurisdiction and that therefore the debts were not within the jurisdiction, for immediately upon the death of the creditor they became assets in the jurisdiction where the debtor resided. This is well settled in Vermont. Furthermore, the statute applies only to property which "passed by will or by the intestate laws of this state." And the court remarks that this property did not pass by virtue of the Vermont law at all, or that law had no force in the domicile of the debtors; it passed by force and virtue of the law of those jurisdictions. The court remarks that it is aware that other courts have reached an opposite conclusion and cites Frothingham v. Shaw, 175 Mass. 59, State v. Dalrymple, 70 Md. 294, 17 A. 82, 3 L. R. A. 372. In re Swift, 137 N. Y. 77, 64 Hun 639, 32 N. E. 1096, 18 L. R. A. 709, 19 N. Y. Suppl. 292. In re Joyslin, 76 Vt. 88, 56 A. 281.

After the decision in In re Joyslin (76 Vt. 88, 56 A. 281) the legislature passed Vermont statute of 1904, c. 30, which changed the phraseology of the earlier act, which included only property which passed by will, or by the intestate laws of the state, to include also property which shall pass by "the decree of the court of this state." Where the record does not show that any administration was had in the foreign jurisdiction and that the several sums due from foreign debtors were collected by the administrator appointed in Vermont, and the proceeds brought here, where they formed a part of the assets which passed by the final decree of the probate court, such assets are subject to tax.

It was argued that in Vermont statute 1904, c. 30, s. 81, the word "persons" in the phrase "shall also apply to all persons who deceased prior to the enactment thereof," had reference to those who received the property, not those from whom it passes. But the court refused to follow this contention, as it would lead to an absurd result. In view of the settled law that the inheritance tax is not a tax on property, but on the transmission of property, it can make no difference with the tax whether the legatee or distributee be alive or dead. In re Howard, 80 Vt. 489, 495, 68 A. 513.

In re Horn, 39 Misc. Rep. 133, 78 N. Y. Suppl. 979.

In re Bentley, 31 Misc. Rep. 651, 66 N. Y. Suppl. 95.

In re Corning, 3 Misc. Rep. 160, 51 N. Y. St. 265, 23 N. Y. Suppl. 285. See post, s. 199. In re Speers, 4 Ohio N. P. 238, 6 Low. D. 398.

The decedent, a resident of Connecticut, died owning certain promissory notes which were in a safe deposit box in the city of New York. With two exceptions the notes were made by non-residents of the state of New York and payment of all of them was secured by property outside of the state. The court holds that they are subject to taxation, relying upon In re Wall, 105 N. Y. App. Div. 643, 94 N. Y. Suppl. 1166, and In re Whiting, 150 N. Y. 27, 44 N. E.715, 34 L. R. A. 232, 55 Am. St. Rep. 640. The court remarks that two of the notes are made by residents of New York and says that it is possible that they should be treated differently, but that it does not seem to the court that the residence of the debtor can change the character of property or determine whether it is liable to an inheritance tax. In re Tiffany, 143 N. Y. App. Div. 327, 128 N. Y. Suppl. 106.

Sec. 214. Bank Deposits.

A deposit in a bank in another state is taxable at the domicile of the depositor.1 Deposits in banks may be also taxable at the place of deposit, irrespective of the physical location of the certificates of deposit themselves, and although the deposit was temporary, for investment only.4 Our supreme court has clearly expressed the theory of such a tax in the following language, where an Illinois decedent left funds in a New York trust company:

"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. Most of us do not commit crimes, yet we nevertheless are subject to the criminal law, and it affords one of the motives for our conduct. So again, what enables any other than the very creditor in proper person to collect the debt? The law of the same place. To test it, suppose that New York should turn back the current of legislation and extend to debts the rule still applied to slander, that actio personalis moritur cum persona, and should provide that all debts hereafter con

tracted in New York and payable there should be extinguished by the death of either party. Leaving constitutional considerations on one side, it is plain that the right of the foreign creditor would be gone. 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. The maxim, mobilia sequunter personam, has no more truth in the one case than in the other. When logic and the policy of a state conflict with a fiction due to historical tradition, the fiction must give way."

1

5

1 Mann v. Carter, 74 N. H. 345, 68 N. E. 130 (savings bank).

2 People v. Griffith, 245 Ill. 532, 543, 92 N. E. 313. In re Houdayer, 150 N. Y. 37. In re Burr, 16 Misc. Rep. 89, 74 N. Y. St. 490, 38 N. Y. Suppl. 811 (savings bank deposit). In re Speers, 4 Ohio N. P. 238, 6 Low. D. 398. Contra, Gilbertson v. Oliver, 129 Iowa 568, 105 N. W. 1002, 4 L. R. A. N. S. 953.

Money deposited by a non-resident in a New York trust company is property within the state subject to the inheritance tax, although mingled with the funds of an estate he represented as trustee. "If he had deposited in specie, to be returned in specie, there can be no doubt that the money would be property in this state subject to taxation. But, instead, he did as business men generally do, deposited his money in the usual way, knowing that, not the same, but the equivalent, would be returned to him upon demand. While the relation of debtor and creditor technically existed, practically he had his money in the bank and could come and get it when he wanted it. It was an investment in this state subject to attachment by creditors. If not voluntarily repaid, he could compel payment through the courts of this state. The depositary was a resident corporation, and the receiving and retaining of the money were corporate acts in this state. Its repayment would be a corporate act in this state. Every right springing from the deposit was created by the laws of this state. Every act out of which those rights arose was done in this state. In order to enforce those rights, it was necessary for him to come into this state. Conceding that the deposit was a debt, conceding that it was intangible, still it was property in this state for all practical purposes, and in every reasonable sense within the meaning of the transfer tax act.

"While distribution of the fund belongs to the state where the decedent was domiciled, as such distribution cannot be made until his administrator has come into this state to get the fund, possibly, after resorting to the courts for aid in reducing it to possession, the fund has a situs here, because it is subject to our laws. A reasonable test in all cases, as it seems to me, is this: Where the right, whatever it may be, has a money value and can be owned and transferred, but cannot be enforced or converted into money against the will of the person owning the right without coming into this state, it is property within this state for the purposes of a succession tax. Thus the right in question is property, because it is capable of being owned and transferred. It is within this state, because the owner must come here to get it. It is subject to taxation, because it is under the con

trol of our laws. It has a money value, because it is virtually money, or can be converted into money upon demand. It is subject to a transfer tax, because the passing, by gift or inheritance, of 'all property, or interest therein, whether within or without this state, over which this state has any jurisdiction for the purposes of taxation,' comes within the expressed intention of the legislature." Per Vann, J., in In re Houdayer, 150 N. Y. 37, 40, 44 N. E. 718, 34 L. R. A. 235, 55 Am. St. Rep. 642, reversing 3 N. Y. App. Div. 474, 38 N. Y. Suppl. 323. (All the justices did not agree with the reasoning given by Vann, J., but they were "of the opinion that a deposit of money in a bank although technically a debt is still money for all practical purposes and as such is taxable under the transfer tax act.")

3 In re Hewitt, 181 N. Y. 547.

A deposit in a trust company by a non-resident in this state for nearly two months before the date of the death of the testator is subject to tax notwithstanding the contention that the deposit was here temporarily for the purpose of investment only. In re Myers, 129 N. Y. Suppl. 194.

tor.

The testator was a resident of Montana and died November 12, 1900, owing a debt against a resident of New York city. The testator had previously loaned money to a resident of New York who gave a check during the last illness of the testator to the testator's secretary in payment of the loan. The secretary deposited this in a New York bank in a special account to the credit of the testaThe court holds that this account is subject to the New York transfer tax although it has also paid a tax in Montana. The court relies on the case of Blackstone v. Miller, 188 U. S. 189, 23 S. Ct. 277, 47 L. Ed. 439. In re Daly, 182 N. Y. 524, 74 N. E. 1116, affirming 100 N. Y. App. Div. 373, 91 N. Y. Suppl. 858. Where a deposit is made in a trust company where it remains fourteen months while the owner is seeking new investment a finding is justified that the property was not "in transitu" in such a sense as to withdraw it from the power of the state. Blackstone v. Miller, 188 U. S. 189, 203, 23 S. Ct. 277, 47 L. Ed. 439, affirming 171 N. Y. 682, 69 N. Y. App. Div. 127.

"Per Holmes, J., in Blackstone v. Miller, 188 U. S. 189, 23 S. Ct. 277,47 L. Ed. 439. In re Blackstone, 171 N. Y. 682, affirming 69 N. Y. App. Div. 127, 74 N. Y. Suppl. 508, reversing 72 N. Y. Suppl. 59.

This language was quoted as controlling the court in In re Rogers, 149 Mich. 305, 112 N. W. 931, 11 L. R. A. N. S. 1134, 14 Detroit Leg. N. 444, 119 Am. St. Rep. 677.

Sec. 215. Bonds..

Bonds have the same situs as the domicile of the owner.1 So bonds of domestic corporations held by non-residents are not taxable2 unless actually situated within the state at the death of the testator.3

1Appeal of Orcutt, 97 Pa. St. 179.

2 In re Bronson, 150 N. Y. 1. In re Whiting, 150 N. Y. 27. In re Morgan, 150 N. Y. 35. In re Del Busto, 6 Pa. Co. Ct. 289.

The bonds of a domestic corporation held outside the state by non-residents do not represent "property within the state" in any conceivable sense. The