Priestley v. Treasurer and Receiver General

• Decision Date: 31 May 1918
• Citation: 230 Mass. 452
• Parties: NEVILLE G. DE B. PRIESTLEY, executor, v. TREASURER AND RECEIVER GENERAL.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

230 Mass. 452

NEVILLE G. DE B. PRIESTLEY, executor, v. TREASURER AND RECEIVER GENERAL.

Supreme Judicial Court of Massachusetts, Suffolk.

May 31, 1918

March 6 1918.

Present: RUGG, C J., DE COURCY, CROSBY, & CARROLL, JJ.

Tax, On legacies and successions. Trust. Partnership, In real estate trust. Under St. 1909, c. 490, Part IV, Section 1, as amended by St 1916, c, 268,

Section 1, which imposes a legacy and succession tax on "all real estate within the Commonwealth, or any interest therein, belonging to persons who are not inhabitants of the Commonwealth, which shall pass by will," shares of a real estate trust, the general scheme of which works a conversion of all the property of the trust into personalty as one fund from the outset, are personal property and are not subject to the tax.

Under the same statute, where the deed of trust creating a real estate trust contained no absolute requirement that the property should be sold and the proceeds distributed among the shareholders and, although the trustees might transfer the property to a corporation if instructed by the shareholders to organize one, they were authorized to sell the property at the expiration of the trust only in default of action relating thereto by the certificate holders, and where the other provisions of the deed of trust created a partnership among the certificate holders, who for convenience had placed the title in trustees as their managing agents, it was held, that there had been no equitable conversion of the real property into personalty and that shares of this trust that belonged to a testator who died domiciled in a foreign country were subject to a legacy and succession tax.

The declaration of trust creating the real estate trust first above described of which the shares were held to be personal property, contained a provision that the

"shares hereunder shall be personal property," and, in regard to the partnership real estate trust whose shares were held to be real estate, it was pointed out that the deed of trust creating that partnership contained no provision that the shares should be personal property,

"whatever the legal effect of such a clause may be."

If what is desired in order to carry out the purposes of a real estate trust is an organization with a distinct entity, intermediate between a corporation and a partnership or pure trust and with its own rights and obligations, the Legislature and not the courts must be resorted to. By

DE COURCY, J.

PETITION, filed in the Probate Court for the county of Suffolk on November 9, 1917, under St. 1909, c. 490, Part IV, Section 21, by the executor of the will of Charles Homans Priestley, late of London, England, who, being domiciled in England, died in France on September 4, 1916, unmarried and without issue, owning certain real and personal property in the county of Suffolk in this Commonwealth, including six hundred shares in the Homans Real Estate Trust, one share in the Boston Real Estate Trust and two and one half shares in the Warren Chambers Trust, which the petition alleged that the Tax Commissioner, in valuing the real estate and any interest therein belonging to the petitioner's intestate in this Commonwealth at the time of his death for the purpose of computing the legacy and succession tax to which such property was subject, had treated as real estate; praying that the court should determine whether the whole or any part of those shares ought to be treated as real estate in this Commonwealth or any interest therein or included in the value of the property on which a legacy and succession tax should be computed.

The judge of the Probate Court made a decree that none of the shares mentioned above ought to be treated as real estate in this Commonwealth or any interest therein belonging to the intestate and that the said shares or any part thereof were not subject to a legacy and succession tax in this Commonwealth. The Treasurer and Receiver General appealed.

On appeal the case was heard by Braley, J., who made a final decree affirming the decree of the Probate Court. The Treasurer and Receiver General appealed.

W. H. Hitchcock, Assistant Attorney General, for the respondent.

J. L. Thorndike, (H.

Ware with him,) for the petitioner.

DE COURCY, J. Charles Homans Priestley died on September 4, 1916, domiciled in England. The petitioner, who is the ancillary executor of his will, has brought this petition to determine whether certain shares in trusts of Massachusetts real estate are subject to a legacy and succession tax.

Undoubtedly these shares constitute property within the jurisdiction of the Commonwealth, and would have been taxable to non-residents before the enactment of St. 1912, c. 678. Peabody v. Treasurer & Receiver General, 215 Mass. 129. That statute, continued by St. 1916, c. 268, Section 1, confined the tax in case of non-resident decedents, to "real estate within the Commonwealth, or any interest therein." If the shares owned by this non-resident decedent constitute real estate or an interest therein they are taxable, but not otherwise.

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