Lewis v. County of Chester , 1869 Pa. LEXIS 88 ( 1869 )

The opinion of the court was delivered, by

Agnew, J.

— The parties to this case are the county of Chester and Mrs. Sarah J. Lewis as trustee; and the question is upon the power of the county to impose taxes upon the trust property in her hands. We must not confound it with the power to tax Charles and Elberta Jones, the eestuis que trust, personally for any property they own. To reach her, it must be shown that she is amenable as trustee for something she holds that our law can reach in her hands. If Charles and Elberta are liable themselves for taxable property, which we do not decide, we cannot add that to her liability. These facts are certain. Dr. Jones, the owner of the estate, was domiciled at his death in New York, his property in fact as well as in law, was situated there, his will was proved there, and letters testamentary granted there to Mrs. Lewis, the executrix. As executrix and trustee under the will, she derived all her power from the will and the laws of New York, and none whatever from Pennsylvania. She settled her account in New York,,was there decreed to invest the balance, and retain it in trust, and distribution yet remains to be decreed upon the further order of the surrogate. It seems to be clear, then, as argued by the plaintiff in error, and on the authorities cited, that the administration and the control and distribution of the trust estate, belongs wholly to the law and to the authorities of New York.. There is no doubt, therefore, of the power of New York, if she chose so to provide, to tax the whole estate there, in the hands of the trustee, as Pennsylvania taxes collateral inheritances in the hands of administrators, shares of stock in the hands of a corporation, or investments in the hands of trustees under our laws. As trustee by virtue of her office of executrix, Mrs. Lewis is unknown to our law; while Pennsylvania has neither the wish nor the power to interfere with anything within the exclusive jurisdiction of New York. But does it follow, as argued for the plaintiff in error, that there is no power in Pennsylvania to tax property found in the possession of Mrs. Lewis here, and held under the protection of our laws? We think not. Let us suppose that the personalty of Dr. Jones, instead of money and securities, consisted of horses and cattle, and that Mrs. Lewis had brought them with her when she moved into Pennsylvania, and kept them here, would it be seriously contended they could escape taxation here ? I think not. But she has done the same thing in effect in regard to a portion of the money of the estate. She brought it here and invested it in mortgages of real estate. How did she accomplish this ? She took a bond and mortgage for the money in her own name. Whether she described herself as executrix or trustee, or not, is immaterial, as the contract is personal and confers on her a personal right to demand payment, which must be enforced by an action in her own name under our laws and in our tribunals. She cannot compel payment, or claim the benefit of a lien as her security except by force of our laws, and the aid of our courts of justice. As to the moneys invested here, and the value of these securities, she clearly holds her investments, not by the law of New York, but by a personal contract protected solely by our law. It is this contract which characterizes her as a trustee in fact by her own act, and draws to it the protection of our law; and to this extent she is liable to taxation as the price she must pay for the privilege. If, as the Act of 1846 does, our law taxes this investment in her hands, she cannot take refuge under the beneficial ownership of Charles and Elberta Jones, the cestuis que trust. She has the estate here, and has subjected it by the bond and mortgage to the operation of the Act of 1846. The same rule must apply to her in Delaware and Maryland, if they likewise tax the property taken there. What she took there and subjected in like manner to their laws is likewise taxable there. She has made herself a trustee in fact to its extent, and looks to those states for its protection. They have the same right as Pennsylvania to tax what she has brought within their borders and invested there. But as to the other property or money never brought into and not in fact held and invested under our laws, its situs remains in New York. The fact that she is personally here does not make her a trustee here, or amenable to our jurisdiction for property not brought here and subjected by her act to the operation of our laws. Not being a trustee under our law or amenable for property not accompanying her person, clearly there is no power to tax her for what she holds in New York, as a trustee, under the law of New York, and amenable only to the authority of that state. The Act of 1846 does not extend to such a case, hut must be confined to the property she has here, and has subjected to our law, by investing it here. All of the cases cited in support of the view of the learned court below, were those where the trustee was appointed or exercised his authority under our law: West Chester v. Darlington, 2 Wright 157; Bor. Carlisle v. Marshall, 12 Casey 397; Spangler v. York County, 1 Harris 322; School Directors v. James, 2 W. & S. 568. In those cases Pennsylvania stood to the trustees as New York does to Mrs. Lewis in this, and therefore lawfully imposed the tax. Mrs. Lewis is liable for the taxes on the sum of $14,800, invested by her in mortgages in this state.

The judgment of the court below is, therefore, modified according to these views, and judgment is here entered for the county of Chester with costs, the sum due to be ascertained by the attorneys as provided for in the stated case.