Appeal of Gallup

• Decision Date: 15 April 1904
• Citation: 76 Conn. 617,57 A. 699
• Court: Connecticut Supreme Court
• Parties: Appeal of GALLUP, State Treasurer.

57 A. 699

76 Conn. 617

Appeal of GALLUP, State Treasurer.

Supreme Court of Errors of Connecticut.

April 15, 1904.

Case Reserved from Superior Court, New Haven County; William T. Elmer, Judge.

Proceedings for the computation of a succession tax on the estate of Owen B. Arnold, deceased. Prom an order of the probate court fixing the amount of the tax, Henry H. Gallup, State Treasurer, appeals. The superior court reserved the cause for the advice of the Supreme Court of Errors. Superior court advised to overrule the demurrer to the reasons of appeal, and to modify the order of the probate court Modified.

Owen B. Arnold, a resident of Meriden, died testate. The court of probate of the district of Meriden admitted his will to probate, and Charles H. Nettleton, his executor, duly qualified September 12, 1900. His property was inventoried and valued according to law, as follows:

Real estate

$ 8,900 00

Personal property

242,738 87

Total

$251,638 87

The inventory included certain stocks, bonds, and securities valued at $75,832, which were in the possession and custody of the testator at Meriden at the time of his death. The stocks and bonds are of corporations not domiciled in Connecticut, and organized under the laws of the United States or of other states, and include shares in the Adams Express Company, a partnership concern, or a joint stock corporation in the nature of a partnership. On April 3, 1903, the court of probate computed the amount of succession tax payable to the state, and passed an order directing its payment by the executor. The amount of the estate upon which the tax was computed, as set forth in the order, was ascertained as follows, to wit, by making deductions from the valuation of the property inventoried of:

Foreign assets

875,832 00

Statutory exemption

10,000 00

Debts and expenses of administration

9,121 00

U. S. internal revenue tax

4,492 91

Total

599,445 91

the inventoried value of the stocks, bonds, and other securities above mentioned. The State Treasurer appealed from this order, assigning, as his substantial reason of appeal, that the deduction of the item called "foreign assets" is not authorized by law. The executor demurred because the item is authorized by law, and also because the law is unconstitutional.

William A. King, Arty. Gen., for State Treasurer. Edward A. Harriman, for Charles H. Nettleton, executor.

HAMERSLEY, J. (after stating the facts). The questions presented by this reservation involve the construction of an "Act providing for a succession tax," passed in 1897. Pub. Acts 1897, p. 901, c. 201. This act was slightly amended in 1901 (Pub. Acts 1901, p. 1200, c. 123), and in 1902 its first section was modified, with the evident intent of expressing more clearly the purpose and meaning of the act, and, as thus amended and modified, was included in the revision of 1902, appearing in sections 2307 to 2377, Gen. St. 1902. In 1889 the Legislature passed an act providing for a tax upon the transfer of property, by will, inheritance, or deed, to a collateral heir or stranger to the blood of a decedent. Pub. Acts 1889, p. 106, c. 180. This act was a condensed reproduction of an act passed by the Legislature of New York in 1885, and, in substantially the same form adopted by our Legislature, was enacted by the Legislature of Massachusetts in 1891. This legislation has never been before this court for construction. In New York, soon after 1885, the Legislature made various alterations resulting in the specified, imposition of a transfer tax upon the personal property found within the state belonging to nonresident decedents, as well as a tax upon the devolution of all personal property belonging to resident decedents. Somewhat similar changes were made by the Legislature of Massachusetts soon after the passage of the act of 1801. It was after these changes were made that our act of 1897 was passed. Our Legislature repealed the act of 1889, except as applicable to estates of persons then deceased, abandoned the policy peculiar to that act, and substituted a new act for giving effect to a modified policy, which it called "providing for a succession tax." The new act contains some language found in the old, but this language must be read and construed in relation to the structure, purpose, and policy of the new act We think, therefore, that the true meaning of the legislation contained in sections 2307 to 2377 can be more correctly ascertained by considering those sections as independent legislation, without speculating as to the views we might have entertained in respect to the abandoned statute of 1889, framed on different lines and for a different purpose, had that statute ever come before us for construction.

"The act imposes an indirect tax or duty of the kind known as death duties; that is, an exaction to be paid to the state upon the occasion of death and the consequent transfer of ownership in the property of the decedent, through the intervening custody and administration of the law, to the persons designated by the law, through the statutes regulating wills, descents, and distribution." This duty is not a tax upon property nor upon person. The property of the decedent as inventoried by his administrator is valued, not for the purpose of imposing a tax upon that property, but solely to furnish a basis for computing the amount of the duty to which the estate described in the act is made subject Nettleton's Appeal, 76 Conn. 235, 245, 56 Atl. 565. The duty is not computed upon the amount of the property valued. Its amount does not depend upon the amount of that property. After the valuation of all the property inventoried, the act contemplates a subtraction from this sum of the amount of the decedent's debts, a subtraction from this remainder of the amount of the costs and charges of administration, a subtraction from this remainder of the sum of $10,000, a subtraction from this remainder of the value of certain bequests for public benefit, and the computation of the amount of the duty upon the mathematical balance thus remaining. The appellee claims, in substance, that the act requires another subtraction to be made before the amount of the duty can be computed, namely, a sum equal to the total appraised value of all personal property not within the territorial limits of this state at the time of the decedent's death, which was inventoried for the purposes of administration and distribution under the laws of this state. This depends, in the first instance, on the purpose of the Legislature as expressed in the provisions of the act laying this particular tax. There are three plans which may be followed in subjecting the estate of a deceased person to a succession tax: (1) A tax based upon the distribution of the net proceeds of a decedent's property to the persons upon whom it devolves by force of the laws of the taxing state. This plan includes in the estate subject to the tax the net proceeds of a decedent's land situate in the taxing state, and in case the decedent was domiciled in the taxing state, but not otherwise, of all his personal property. (2) A tax based upon any transfer, actual or potential, of a decedent's personal property situate at his death within the taxing state, whether the net proceeds of that property passes to the decedent's beneficiaries by force of the laws of the taxing state or not. Under this plan the tax is more nearly akin to an ordinary transfer duty. (3) The inclusion in one act of a tax under each of these plans. There would seem to be no constitutional objection to the adoption of either plan. Blackstone v. Miller, 188 U. S. 189, 23 Sup. Ct. 277, 47 L. Ed. 439. Our succession tax is laid in pursuance of the first plan, and the act is framed in view of the existing law of domicile in relation to this subject.

Personal property is bequeathed by will, and is descendible, by inheritance, according to the law of the domicile, and not by that of its situs. Eidman v. Martinez, 184 U. S. 578, 581, 22 Sup. Ct. 515, 40 L. Ed. 697. It is a settled principle of law that the disposition of, distribution of, and succession to personal property, wherever situated, is to be governed by the laws of that state where the owner had his domicile at the time of his death. Holcomb v. Phelps, 16 Conn. 127, 132. Under our law it is the duty of the administrator at the place of domicile to inventory and account for all such personal property, and that property is regarded as within the jurisdiction of the state for purposes of administration and distribution. It is true that the actual situs of such property in another state involves a power or jurisdiction in that state in respect to it for certain purposes, including the power, through process of administration, to appropriate so much as may be necessary to the satisfaction of claims of local creditors, but such administration is ancillary to that of the domicile, and the jurisdiction thus exercised is not in denial of, but in aid of, that exercised at the owner's domicile. This principle of law, though founded on international comity, "is equally obligatory upon our courts as a legal rule of purely domestic origin." This principle is settled and unquestioned law within this state. Marcy v. Marcy, 32 Conn. 308, 315 et seq.; Russell v. Hooker. 67 Conn. 24, 27, 34 Atl. 711, 35 L. R. A. 495; Rockwell v. Bradshaw, 67 Conn. 8, 34 Atl. 758. It has generally been recognized by federal and state courts as law binding throughout the United States. It is in the exercise of this power or jurisdiction in respect to the personal property of a decedent domiciled within its limits that the state taxes a succession to that property, notwithstanding gome of it may have been at the decedent's death within the limits of another state. The Legislature framed its act in view of this...