Rhode Island Hospital Trust Co v. Doughton
Citation | 70 L.Ed. 475,46 S.Ct. 256,43 A. L. R. 1374,270 U.S. 69 |
Decision Date | 01 March 1926 |
Docket Number | No. 106,106 |
Parties | RHODE ISLAND HOSPITAL TRUST CO. v. DOUGHTON, Commissioner of Revenue of North Carolina |
Court | United States Supreme Court |
Messrs. John M. Robinson, of Charlotte, N. C., and W. R. Tillinghast and James C. Collins, both of Providence, R. I., for plaintiff in error.
[Argument of Counsel from pages 70-72 intentionally omitted] Mr. D. G. Brummitt, of Oxford, N. C., for defendant in error.
[Argument of Counsel from pages 73-77 intentionally omitted] Mr. Chief Justice TAFT delivered the opinion of the Court.
This is a writ of error to the Supreme Court of North Carolina in a consolidation of two causes, the first being an appeal to a superior court of the state by the plaintiff in error, the Rhode Island Hospital Trust Company, executor of George Briggs, from an inheritance tax assessment on the decedent's estate made by the commissioner of revenue of North Carolina, and the second being an action at law by the executor to recover the taxes paid by it on the assessment under protest. The superior court held that the inheritance taxes imposed by the commissioner of revenue of the state were lawful and that the executor was not entitled to recover them back as illegally collected. The Supreme Court of North Carolina affirmed this judgment. 121 S. E. 741, 187 N. C. 263.
The assignment of error of the executor is based on the invalidity under the Fourteenth Amendment of that part of the Revenue Act of 1919 of North Carolina , which provides:
* * *
The seventh subsection further provides:
George Briggs was a resident of the state of Rhode Island, and domiciled therein at the time of his death. He never resided in North Carolina. He died testate October 29, 1919, leaving a large estate. The plaintiff, Rhode Island Hospital Trust Company, was appointed executor of Briggs' will, and qualified as such before the municipal court of the city of Providence, R. I. Among other personal property passing to the executor under the will were shares of stock in the R. J. Reynolds Tobacco Company, which with declared dividends unpaid were valued at $115,634.50. The R. J. Reynolds Tobacco Company, hereinafter for brevity called the Tobacco Company, is a corporation created under the laws of the state of New Jersey. Section 1181 of the Consolidated Statutes of North Carolina provides that every foreign corporation, before being permitted to do business in North Carolina, shall file in the office of the secretary of state a copy of its charter, a statement of the amount of its capital stock, the amount actually issued, the principal office in North Carolina, the name of the agent in charge of the office, the character of the business which it transacts, and the name and post office addresses of its officers and directors. It is required to pay, for the use of the state, 29 cents for every $1,000 of its authorized capital stock, but in no case less than $25, nor more than $250. It may withdraw from the state upon paying a fee of $5, and filing in the office of the secretary of state a statement of its wish to do so. In August, 1906, the Tobacco Company filed its application under the statute and complied with the requirements, and a certificate granting authority to it to do business in the state was issued. Two-thirds in value of its entire property is in North Carolina. Since 1906, it has regularly paid the license and franchise tax required, and is still doing business in the state.
Briggs' certificates of stock in the Tobacco Company, passing under his will to his executor, were, none of them in the state of North Carolina at the time of his death, and never had been while they were owned by him. The commissioner of revenue of the state assessed an inheritance tax upon $77,089.67, 66 2/3 per cent. of the total value of Briggs' stock, amounting to $2,658.85. The plaintiff, as executor, applied to the office of the company in New Jersey to have this stock transferred to it as executor, in compliance with the will of Briggs. The company refused to do so, on the ground that under the law of North Carolina, already set forth, it would, by such transfer before the executor paid the transfer tax, subject itself to a penalty which could be exacted out of its property in that state. Thereupon the executor paid the tax under protest, and brought suit to recover it back.
The question here presented is whether North Carolina can validly impose a transfer or inheritance tax upon shares of stock owned by a nonresident in a business corporation of New Jersey, because the corporation does business and has two-thirds of its property within the limits of North Carolina. We think that the law of North Carolina, by which this is attempted, is invalid. It goes without saying that a state may not tax property which is not within its territorial jurisdiction. State Tax on Foreign Held Bonds, 15 Wall. 300, 21 L. Ed. 179; Louisville Ferry Co. v. Kentucky, 23 S. Ct. 463, 188 U. S. 385, 47 L. Ed. 513; Delaware Railroad v. Pennsylvania, 25 S. Ct. 669, 198 U. S. 341, 49 L. Ed. 1077; Union Transit Co. v. Kentucky, 26 S. Ct. 36, 199 U. S. 194, 50 L. Ed. 150, 4 Ann. Cas. 493; Metropolitan Life Insurance Co. v. New York, 27 S. Ct. 499, 205 U. S. 395, 399, 51 L. Ed. 853; United States v. Bennett, 34 S. Ct. 433, 232 U. S. 299, 306, 58 L. Ed. 612; International Paper Co. v. Massachusetts, 38 S. Ct. 292, 246 U. S....
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