Wood v. Ford

When the State has the power to tax, such taxation may be by means of excise or by ad valorem levies upon just valuation of property as the law provides.

The constitution and statutes of this State authorize ad valorem taxation upon "the just valuation" of "intangible personal property," which is by the statute defined to be "all personal property which is not in itself intrinsically valuable but which derives its chief value from that which it represents."

In this case the tax is not upon the bonds of the trust fund but upon the property interest of the appellee, a citizen of Florida, in the trust fund consisting of intangible personal property represented by bonds which are not exempt from taxation.

Unless otherwise provided by law, intangible personal property is taxable at the domicile of its owner, except where such intangible personal property has by its use or otherwise acquired a business situs for taxation purposes at another place. One who has a vested beneficial interest in intangible personal property may be regarded as an owner of the property for authorized taxation purposes to the extent of "the just valuation" of the property interest of such owner.

The "intangible personal property" being taxed is the right,interest or estate of the appellee in the trust fund consisting of intangible personal property — industrial bonds — which are held in New York by the trustee there domiciled and having the legal title to the bonds without any beneficial interest and with authority only to administer the trust fund as directed in the deed of trust for the sole benefit of the single beneficiary or cestui que trust having a life estate with authority to devise the corpus of the trust fund, such life tenant with power of appointment by will being domiciled in Dade County, Florida. The beneficial interest vested in the appellee beneficiary of the trust fund, is a valuable property interest which is by the deed of trust under the law made a separate and distinct property right, interest or estate, from the legal title and authority to hold and administer the trust fund which the deed of trust vests in the trustee in trust.

The deed of trust permits but does not require the trust fund bonds to be held in New York by the trustee. The taxingsitus of the property rights of the beneficiary or cestui que trust may be different from the taxing situs of the trustee's legal title property rights in the trust fund.

The holding of the trust fund industrial bonds by the trustee in New York is not for any business purposes whatever except for safe convenience in administering the trust fund as required by the trust deed for the benefit of the beneficiary, appellee here. The trustee is authorized to keep the trust fund invested and also safe and productive; but not to engage in any business whatever with the trust fund.

The bonds constituting the trust fund are intangible personal property and the beneficiary's interest therein is likewise intangible personal property, the beneficiary's interest in the trust fund being separate and distinct from that of the trustee. The trust deed and the trust fund bonds which evidence or represent the rights of the parties and the values of the trust fund bonds, are not in themselves "intrinsically valuable but derive" their "chief value from that which" they represent", as expressed by the taxing statute. Such interest of the beneficiary is one of separate ownership of individual property rights, which property rights are subject to taxation under this statute.

As the beneficiary of the trust fund has a life estate with power to devise the trust fund, he is in equity at least the real beneficial owner of the trust fund (after costs of administration are paid), which trust fund is "intangible personal property"; and as such trust fund has not, by the trust deed or by the business use of such trust fund or otherwise, acquired a legal taxation situs in New York or elsewhere; and as the domicile of the adult beneficiary of the trust fund is in Florida, the taxing situs of the interestof the beneficiary in the trust fund is at his domicile in Florida.

Though the trust fund bonds are held in New York by the trustee with legal title thereto solely for the purposes of administrating the trust fund for the benefit of the life tenant who has the power to devise the corpus of the intangible trust fund, such possession of the trust fund bonds in New York for administrative purposes does not control the taxation situs of the beneficiary's property rights and interest in the intangible personal property trust fund. Such interest of the beneficiary in the trust fund is distinct and separate from any rights or interest which the trustee may have in the trust fund by reason of having the bare legal title and the possession of the trust fund bonds for purposes only of administering the trust fund for the benefit of the sole beneficiary during his life, such sole beneficiary having also the right to devise the trust fund.

The property right, interest or estate of the life tenant beneficiary in the intangible personal property trust fund is a valuable ownership right in personal property "belonging to a person residing in this State," Section 893 (694) C. G. L., which has a situs for State taxation purposes at the domicile of the adult beneficiary, which is in Dade County, Florida. This is so even though the trustee also has some rights or interests in the trust property that are distinct from those of the beneficiary, by virtue of the legal title and administrative duties thereunder, that are vested in the trustee under the trust deed, and even though such interestof the trustee that are separate from those of the beneficiary, may be taxable under the laws of New York where the trustee is domiciled.

REHEARING DENIED.

BROWN, C. J., TERRELL, BUFORD, CHAPMAN, THOMAS AND ADAMS, J. J., concur.