Maguire v. Trefry

• Citation: 64 L.Ed. 739,253 U.S. 12,40 S.Ct. 417
• Decision Date: 26 April 1920
• Docket Number: No. 280,280
• Parties: MAGUIRE v. TREFRY, Tax Com'r of Commonwealth of Massachusetts
• Court: U.S. Supreme Court

253 U.S. 12

40 S.Ct. 417

64 L.Ed. 739

MAGUIRE

v TREFRY, Tax Com'r of Commonwealth of Massachusetts.

No. 280.

Argued March 24, 1920.

Decided April 26, 1920.

Mr. Richard W. Hale, of Boston, Mass., for plaintiff in error.

Mr. Wm. Harold Hitchcock, of Boston, Mass., for defendant in error.

Mr. Justice DAY delivered the opinion of the Court.

Massachusetts has a statute providing for a tax upon incomes. Gen. Stats. Mass. 1916, c. 269. In the act imposing the tax it is provided:

'If an inhabitant of this commonwealth receives income from one or more executors, administrators or trustees, none of whom is an inhabitant of this commonwealth or has derived his appointment from a court of this commonwealth, such income shall be subject to the taxes assessed by this act, according to the nature of the income received by the executors, administrators or trustees.' Section 9.

The plaintiff in error is a resident of the state of Massachusetts, and was taxed upon income from a trust created by the will of one Matilda P. MacArthur formerly of Philadelphia. The plaintiff in error under the will of the decedent was the beneficiary of a trust thereby created. The securities were held in trust by the Girard Trust Company of Philadelphia. Those which were directly taxable to the trustee were held exempt from taxation in Massachusetts under the terms of the statute of that state. The securities the income form which was held taxable in Massachusetts consisted of the bonds of three corporations and certain certificates of the Southern Railway Equipment Trust. These securities were held in the possession of the trustee in Philadelphia. The trust was being administered under the laws of Pennsylvania. The Supreme Judicial Court of Massachusetts held the tax to be valid. 230 Mass. 503, 120 N. E. 162.

Of the nature of the tax the Chief Justice of Massachusetts, speaking for the Supreme Judicial Court, said:

'The income tax is measured by reference to the riches of the person taxed actually made available to him for valuable use during a given period. It establishes a basis of taxation directly proportioned to ability to bear the burden. It is founded upon the protection afforded to the recipient of the income by the government of the commonwealth of his residence in his person, in his right to receive the income and in his enjoyment of the income when in his possession. That government provides for him all the advantages of living in safety and in freedom and of being protected by law. It gives security to life, liberty and the other privileges of dwelling in a civilized community. It exacts in return a contribution to the support of that government measured by the based upon the income, in the fruition of which it defends him from unjust interference. It is true of the present tax, as was said by Chief Justice Shaw in Bates v. Boston, 5 Cush. [Mass.] 93, at page 99: 'The assessment does not touch the fund, or control it; nor does it interfere with the trustee in the exercise of his proper duties; nor call him, nor hold him, to any accountability. It affects only the income, after it has been paid by the trustee' to the beneficiary.'

We see no reason to doubt the correctness of this view of the nature and effect of the Massachusetts statute, and shall accept it for the purpose of considering the federal question before us, which arises from the contention of the plaintiff in error that the imposition of the tax was a denial of due process of law within the protection of the Fourteenth Amendment to the federal Constitution, because, it is alleged, the effect of the statute is to subject property to taxation which is beyond the limits and outside the jurisdiction of the state. To support this contention the plaintiff in error relies primarily upon the decision of this court in Union Transit Co. v. Kentucky, 199 U. S. 194, 26 Sup. Ct. 36, 50 L. Ed. 150, 4 Ann. Cas. 493. In that case we held that tangible, personal property, permanently located in another state than that of the owner, where it had acquired a situs, and was taxed irrespective of the domicile of the owner—was beyond the taxing power of the state, and that an attempt to tax such property at the owner's domicile was a denial of due process of law under the Fourteenth Amendment. This ruling was made with reference to cars of the Transit Company permanently employed outside the state of the owner's residence. In that case this...