State v. Estate of Baldwin , 323 Mo. 207 ( 1929 )

I concur in the result reached in the leading opinion, but deem it not inappropriate to state the facts as I read the record, and my reasoning and conclusion as to why the judgment of the circuit court should be reversed and remanded.

This is a suit to subject to the payment of an inheritance tax certain intangible personal property belonging to the estate of Carrie Pool Baldwin, who died testate at her home in Quincy. Adams County, Illinois, October 4, 1926. Her son and sole legate, Thomas A. Baldwin, was, under the terms of her will, the executor of her estate. Ancillary letters of administration with the will amexed, upon her property in this State, were issued in Lewis County, Missouri, to Harry Carstarphen on the 22nd day of October, 1926. Her estate consisted of real and personal property in the states of Illinois and Missouri. Aside from her real property in Missouri, not involved in this controversy, her personal property therein consisted of cash, United States Government bonds and promissory notes of individuals and corporations, of the aggregate face value of $58,898.09. This property had been deposited by her at various times in lock boxes and safe-deposit vaults in different banks in this State.

The notice required by Sections 568, Revised Statutes 1919, of the inheritance tax law, in regard to property in this State belonging to a non-resident decedent owner, was given to the State Treasurer. On December 16, 1926, the Probate Court of Lewis County, Missouri, appointed an appraiser to appraise the property above mentioned belonging to the non-resident decedent, Carrie Pool Baldwin, for the purpose of determining the amount of the inheritance tax due thereon. This appraisement was made and upon the report of the same being filed in the probate court that court approved the report and assessed an inheritance tax upon all of the property of the non-resident decedent listed in said report as located in this State. Upon the filing of said report the domiciliary and the ancillary administrators filed in said court exceptions to the report of the appraiser, contending that the intangible personal property of the non-resident decedent located in this State, to-wit, the cash, bonds, notes, etc., was not taxable in this State on account of the nature of said property and the non-residence of the testator. The court overruled these exceptions and the administrators appealed to the Circuit Court of Lewis County, Missouri. Upon the case being heard in that court on the exceptions filed in the probate court, the ruling of the probate court was reversed, and it was held that all that portion of the appraiser's report which appraised the intangible personal property of the non-resident decedent was void. An appeal from said judgment was thereupon perfected to this court.

The section of the Missouri Inheritance Tax Law (Sec. 558, R.S. 1919), so far as the same has reference to the matter at issue, is in effect as follows: "A tax shall be and is hereby imposed upon the transfer of any property, real, personal or mixed or any interest therein or income therefrom, in trust or otherwise, to persons, institutions, associations or corporations . . . When the transfer is by will, or intestate law of property within the state or within the jurisdiction of the state and the decedent was a non-resident of the state at the time of his death. When the transfer is made by a resident or by a non-resident when such non-resident's property is within this state, or within its jurisdiction, by deed, grant, bargain, sale or gift made in contemplation of the death of the grantor, vendor, or donor, or intending to take effect in possession or enjoyment at or after such death."

I. The intangible character of the personalty involved in this controversy is conceded by the respondent. The question demanding solution is the liability of this property toIntangible taxation under the inheritance law of this State.Personalty. The theory adopted here and elsewhere, as a basis for the imposing of what is designated as a tax of this character, is that it is an excise or impost levied on the transfer of the property from dead hands to living ones. [Knowlton v. Moore, 178 U.S. 41, 44 Law Ed. 969; Scholey v. Rew, 23 Wall. 331, 123 Law Ed. 99; Est. of Zook-Hibbard v. Thompson, 317 Mo. l.c. 995,296 S.W. 778.]

Although the value of the property is used to determine the amount of the tax, this is the only respect in which it bears a resemblance to property taxation. It may well be said, therefore, that it is not a tax on property, but upon the right of its transmission or succession. [State ex rel. McClintock v. Guinotte, 275 Mo. 298; Maguire v. University, 271 Mo. 359; State ex rel. Fath v. Henderson, 160 Mo. l.c. 215.] Probably the best definition of the same, and the one adopted by many authorities, is that it is a charge on the privilege of succession or the right of the heir, devisee or legatee to receive rather than the right of an ancestor or donor to give, or, through the instrumentality of the law, to transmit his property. [State ex rel. Garth v. Switzler, 143 Mo. 328; State ex rel. v. Mann,76 Wis. 478; Gelsthorpe v. Furnell, 20 Mont. 299, 39 L.R.A. 170; Lacy v. State Treas., 121 N.W. (Iowa) 179.]

II. The comprehensive language of Section 558, Revised Statutes 1919, is such as to include within the power of the State any property, real, personal or mixed, or any interest therein or income therefrom, in trust or otherwise, when theBreadth of property is within the State or within itsStatute. jurisdiction at the time of the death of the owner, whether the latter was at the time a resident or a non-resident of the State.

The provisions of the statute being ample to authorize the imposition of this tax, it remains to be determined whether from the nature of the property or from constitutional or other considerations, the statute may be held to apply in cases as at bar.

It may be stated generally that all property, tangible or intangible, no matter where located and whether it has ever been within the State or not is subject to an inheritance tax in the state of the domicile of the decedent. We so held in In re Est. Zook-Hibbard v. Thompson, 317 Mo. 986, 296 S.W. 778, and cases cited. We are not concerned here with the reasons for such ruling, other than to say that the theory upon which the imposition of the tax was upheld was under the maxim mobiliasequuntur personam. Whether the application of this maxim is founded in reason as to property actually located other than at the domicile of the owner, might, if the facts warranted, be entitled to serious consideration. We say this incidentally, because a review of the cases leads to the conclusion that the application of this maxim that movables follow the person, has been, in many instances, cut down until its field has not only become very narrow, if it may be said to still exist. It will be enough to say that the history of the origin of this maxim is stated in an interesting manner in Wharton's Conflict of Laws (3 Ed.) sec. 297, in which it is shown that the origin and application of the maxim was under conditions entirely different from those existing at the present time.

III. The facts at bar present a case the converse of those in In re Zook's Estate, supra. In the latter the question submitted was the authority of this State to levy an inheritance tax on intangible property on deposit in banks in another state than that of the decedent owner, who resided at the timeThe General of his death in this State. In the instant case itLaw. is sought to impose the tax on intangible property, located in this State, the decedent owner of which had her domicile in another state at the time of her death.

The validity, therefore, under the Constitutions, State and Federal, of the statute authorizing the imposition of an inheritance tax under the facts in the case at bar, is of moment in the determination of this case.

In Blackstone v. Miller, 188 U.S. 189, 47 Law Ed. 439, the constitutional power of a state, by virtue of the citizenship and residence of the debtor, to exact an inheritance tax in respect of a debt due from a resident of the state to the estate of a non-resident, was affirmatively declared. The indebtedness in that case consisted of bank deposits which were regarded as money for all practical purposes owned by a non-resident decedent at the time of his death and as such taxable under the inheritance or transfer law of the State. In rendering this decision the United States Supreme Court did not rest its ruling upon any distinctions between the technical indebtedness represented by a bank deposit and other forms of indebtedness, but it was expressly put upon the broader ground that the transfer of the indebtedness depends upon the law of the residence of the debtor, 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; the same principle, the court observed, that has been recognized with regard to the garnishment of a domestic debtor or an absent defendant — citing Chicago, R.T. P. Railroad Co. v. Sturm, 174 U.S. 710, 43 L. Ed. 1144, 19 Sup. Ct. Rep. 797.

In State ex rel. Graf v. Probate Court. 128 Minn. 371, L.R.A. 1916A, 901, the devolution of debts owed to non-residents, whether evidenced by promissory notes or not, was held to be subject to a succession tax. The debts consisted of promissory notes and book accounts, the debtor being a domestic corporation. The Minnesota statute imposed a tax when a transfer was by will or the intestate law of property within the state or within its jurisdiction and the decedent was a non-resident of the State at the time of his death. The court's holding was to the effect that the property might be subjected to the payment of a succession tax by the State in whose jurisdiction it was found.

In Chaffin v. Johnson, 200 Iowa 96, 204 N.W. 424, the court quotes from Blackstone v. Miller, supra, to the effect that it is the law of the place where the debtor is that renders the evidences of the debt liable to the payment of a succession tax; and in reply to the contention that a distinction exists between a bank deposit and other debts it was held as applied to the statute, that the distinction was without substance and that the deposit of funds in a bank and the taking of a negotiable certificate therefor created the relation of debtor and creditor.

In State ex rel. Collector v. Bunce, 187 Mo. App. 607, 173 S.W. 101, a note belonging to the estate of a non-resident, the maker of which resided in Missouri (the administration of whose estate was had in this State), was held to be within this jurisdiction and liable to an inheritance or succession tax. The facts in regard to that case are that the note was brought to Missouri by the owner of the same when he came here a short time before his death. The decision of this court was, however, not predicated on that fact, but upon the fact that the debtor was a resident of this State and that administration was had thereon within this jurisdiction.

In Re Gibbes, 84 A.D. 510, 83 N.Y.S. 53, affirmed without opinion in 176 N.Y. 565, 68 N.E. 1117, the court observed that the decisions that money left on deposit by a non-resident within New York is taxable (Re Houdayer, 150 N.Y. 37, 34 L.R.A. 235, 55 Am. St. 642, 44 N.E. 718; Re Blackstone, 69 A.D. 127,74 N.Y.S. 508, affirmed in 171 N.Y. 682, 64 N.E. 1118, which is affirmed in Blackstone v. Miller, 188 U.S. 189, 47 L. Ed. 439, 23 Sup. Ct. Rep. 277), go upon the theory that money upon deposit in a bank is the same, in effect, as if the testator had placed the money in a deposit vault, and that, therefore, it is property left by him within the State. It may be observed, however, that the argument, at least, of the United States Supreme Court in the Blackstone Case. affirms the power of the state of the debtor's domicile to exact the tax, even in respect of ordinary debts.

Although the items belonging to the estate of the non-resident which were held subject to the tax in Re Daly, 100 A.D. 373,91 N.Y.S. 858 (affirmed without opinion in 182 N.Y. 524,74 N.E. 1116), were treated as bank deposits and so equivalent to cash, the majority of the court was of the opinion that they would be subject to the tax even if treated as debts in the ordinary sense, citing in support of this view the opinion in the United States Supreme Court in Blackstone v. Miller, supra.

IV. Many of the objections here made to the constitutionality of the statute under review were ruled upon adversely to the objectors by this court in State ex rel. McClintock v. Guinotte,275 Mo. 298. In that case it was held that the statute was not in violation of the following constitutional provisions: Section 30 of Article 2, that no person shall be deprived of property without due process of law; Section 28 of Article 4, that no bill shall contain more than one subject, which shall be clearly expressed in its title; Section 43 of Article 4, that money received by the State shall be paid into the state treasury and not permitted to be diverted or drawn therefrom, except under lawful appropriations therefor: Sub-section 16 of Section 53 of Article 4, prohibiting the passage of local or special laws of descent or succession; Sub-sec. 21 of Section 53 of Article 4, prohibiting the passage of local or special laws affecting the estates of minors; Section 3 of Article 10, that taxes must be levied and collected for public purposes and must be uniform upon the same class of subjects.

V. The strong trend of authority in the courts of last resort in the different states is in harmony with the ruling in the Blackstone case, supra, to the effect that inheritance taxes not being taxes on property but on the privilege of the transmission or succession of the same, a state may measure suchBlackstone taxes by the value of the property, although it mayv. Miller. not tax the same directly.

It is a misconception of the rulings of the Supreme Court of the United States to contend that cases subsequent to the Blackstone case overrule the latter. In an interesting and exhaustive review of these cases (relied upon by the respondent) by Mr. Harry W. Kroeger in Vol. XIV, p. 99, St. Louis Law Review, it is clearly shown that they do not overrule the doctrine of the Blackstone case. It will be found upon an analysis of the cases referred to in the respondent's brief that the facts involved therein were different from those in that case; and that whatever may have been said in criticism of the latter was in passing, and was not decisive of the issues therein submitted.

VI. The ruling in the Zook case, supra, by our own Supreme Court, that intangible property located in another state and owned by one who at the time of his demise was a resident of this State, was taxable at the domicile of the owner, does not militate against the correctness of the conclusion thatZook the privilege of taxing the transfer or inheritance ofCase. such property could only be levied at such domicile. Although subject to the tax in Missouri, it might also be liable to a similar tax in the state where it was located. This conclusion is but the converse of the rule established by several authorities that the power of the domiciliary state to exact a tax on the transmission of intangibles is not defeated by the imposition of a like tax by another state. [In Re Hodges, 170 Cal. 492, L.R.A. 1916-A, 837; Roark v. Matthews, 125 Ark. 378, 188 S.W. 841.]

Our statute is sufficiently broad to authorize the exaction of an inheritance tax in respect of all property within the jurisdiction of the State regardless of the domicile of the owner. Under a statute not dissimilar in its material features from that at bar, the case of Re Hartman, 70 N.J. Eq. 664, 62 A. 560, gives a comprehensive review of the power of a domiciliary state to exact an inheritance tax in respect of all personal property regardless of its location and its subjection to the taxing power of other states. In that case it was held that the entire personal estate of a decedent domiciled in New Jersey was subject to the tax, although a tax of precisely the same character and amount had been levied and collected in New York where the personal property was located, and this notwithstanding that the New York tax had been legally imposed. The New Jersey court observed that the unfortunate situation resulting from the required payment of the two taxes of like character by the same legatees for the right of succession to the property could not control the determination of the question, for such a condition frequently arises and while its presence always induces careful consideration on the part of the court to find some legal method to prevent it, it must be submitted to unless it can be avoided under settled rules relating to the subject.

In Re Sandford, 188 Iowa 833, 175 N.W. 506, in reply to the contention that personal property in Nebraska could be taken into consideration in fixing the tax at the domicile of the owner in Iowa for the reason that a similar tax would beDouble imposed and collected in Nebraska resulting in doubleTaxation. taxation, the court said that whatever real merit may be claimed for that position the courts uniformly hold that the tax may be imposed by the state in which the property has its situs and also in the domiciliary state. "Each jurisdiction," said the court, "exercises its own separate and independent power of taxation and there is no conflict."

In Nuckolls v. Comm., 127 Va. 640, 105 S.E. 230, the court held that the fact that two states, each dealing with its own laws, have taxed the rights of succession their laws respectively confer, affords no reason for complaint on constitutional grounds. This conclusion was occasioned by the overruling of an objection to the exaction of a tax in respect of shares of stock in a national bank located in Missouri, which stock was owned by a decedent domiciled in Virginia, and which stock had been subjected to a similar tax in Missouri. This opinion is replete with learning on this subject.

VII. Further concerning the contention as to the invalidity of the inheritance tax statute on the ground that it is in violation of the Fourteenth Amendment of the Federal Constitution, while not specifically referred to in the case of State ex rel. McClintock v. Guinotte, 275 Mo. 298, a like clause inFourteenth Section 30, Article 2, of the State Constitution toAmendment. that in the Fourth Amendment having particular reference to the right to due process of law, was construed, and it was held that the inheritance statute did not deny this right. A like conclusion is, under the most elementary rule of construction, applicable in determining whether the statute contravenes the Fourteenth Amendment. That it does not is attested by numerous cases construing like statutes. [Keeney v. New York, 222 U.S. 525, 56 Law Ed. 299, 38 L.R.A. (N.S.) 1139, and cases; Nat'l. Safe Deposit Co. v. Illinois, 232 U.S. 59, 58 Law Ed. 504, Ann. Cas. 1912-B, 430; Minot v. Treasurer Receiver General, 207 Mass. 588, 33 L.R.A. (N.S.) 236.]

The case of Frick v. Pennsylvania, 268 U.S. 473, is by no means a denial of the right of the state where the property is located to impose an inheritance tax with respect to intangible personalty. That case has reference to the denial of the constitutional power of a domiciliary state to tax tangible personal property physically located in another state than that of the decedent and not to intangibles.

The discussion of the power to tax by Chief Justice MARSHALL, in McCullough v. Maryland, 4 Wheat. 316, has reference to property taxation, as is evident from its context and notOther to a tax laid upon a privilege or a right to receiveCases. property by an heir or legatee.

A clear line of demarcation is made in the Frick case between the rules governing the taxation, under inheritance or succession laws, of tangible and intangible personalty. The following paragraphs from the opinion in that case will demonstrate the correctness of that interpretation:

"Counsel for the State cite and rely on Blackstone v. Miller,188 U.S. 189, and Bullen v. Wisconsin, 240 U.S. 625. Both of the cases relate to intangible personalty, which has been regarded as on a different footing from tangible personalty. When they are read with this distinction in mind, and also in connection with other cases before cited, it is apparent that they do not support the tax in question."

So far as relevant to the matter at issue, Blodgett v. Silberman, 277 U.S. 1, 48 Law Ed. 410, simply holds that intangible personalty has such situs at the domicile of the owner that its transfer upon his death may be taxed there. There is no ground for controversy in regard to this ruling militating against the power of a state where the property is located other than that of the domicile of the decedent to also impose an inheritance tax on such property. The legal propriety of such a course has been demonstrated. Chief Justice TAFT, who wrote the opinion in the Blodgett-Silberman case, expressly states that as to the right of the state of the situs to also impose an inheritance tax on intangible personalty is not a matter of inquiry in the Blodgett-Silberman case.

The question involved in State ex rel. Auto. Ins. Co. v. Gehner, 320 Mo. 702, 8 S.W.2d 1057, was in reference wholly to property, and not to inheritance, taxation. When the court says in that case that "bonds, mortgages and debts generally have nositus independent of the domicile of the owner" the reasonable interpretation of this declaration is that in limiting the situs, the court had reference to its purpose in the imposition of advalorem or property taxes. No other question was in issue. A like rule of construction may be applied to a similar statement in State ex rel. Hickman v. Lewis, 256 Mo. 98, 165 S.W. 319.

For the reasons stated, so much of the judgment of the circuit court in this case should be reversed as holds that the intangible personalty in this State belonging to the estate of Carrie Pool Baldwin is not subject to the payment of an inheritance tax; and the court should be directed to enter up a judgment in conformity with this opinion.