Beidler v. South Carolina Tax Com'n

• Decision Date: 27 May 1927
• Docket Number: 12212.
• Citation: 160 S.E. 264,162 S.C. 447
• Parties: BEIDLER et al. v. SOUTH CAROLINA TAX COMMISSION.
• Court: South Carolina Supreme Court

160 S.E. 264

162 S.C. 447

BEIDLER et al. v. SOUTH CAROLINA TAX COMMISSION.

No. 12212.

Supreme Court of South Carolina

May 27, 1927

Proceedings between Francis Beidler, II, and another, as executors of the last will and testament of Francis Beidler, deceased, and the South Carolina Tax Commission, for the determination of an inheritance tax alleged to be due the state of South Carolina. From a decision of the South Carolina Tax Commission imposing an inheritance tax on certain assets of the estate, the executors appeal.

Decision affirmed in part, and appeal in part sustained and decision reversed, with directions.

On remand from the Supreme Court of the United States (282 U.S 1, 51 S.Ct. 54, 75 L.Ed. 131), which reversed in part the judgment of the Supreme Court of South Carolina; on motion by the executors to reverse the decision of the South Carolina Tax Commission in conformity with the opinion of the Supreme Court of the United States; and on motion by the South Carolina Tax Commission to refer the case back to the Tax Commission to take additional testimony.

Pages 3 and 4 of the case and exceptions directed to be reported are as follows:

On July 25, 1925, the South Carolina tax commission levied an inheritance or transfer tax upon all of the above assets of $144,106.10. The following is the computatation sheet:

Exhibit No. 1.

South Carolina Tax Commission.

Inheritance Tax Division.

(Nonresident Testate)

Computation Sheet.

Will of Beidler, Francis

Late of State of Illinois

Executor Geo. Engelking & Francis Beidler II

Address 20 W. Jackson Blvd, Chicago.

Attorneys Hendersons & Salley

Date of Qualification 1-28-25

Address Aiken, S. C.

Date Tax Due July 31, 1925 Property and Summary of Distribution. Personal estate ..... $2,253,536.22 Real estate ......... ------------- Total estate, ....... $2,253,536.22 Debts and expenses .. 5,000.00 ------------- Net estate .......... $2,248,536.00 Exemptions .......... 20,200.00 ------------- $2,228,336.00 Certifications. Date. Certificate No. Amount. To executor July 25th, 1925 ............. $144,106.10 Computation of Tax. Devisees and Legatees. ------------------------------------------------------------------------------- Name. Relationship. Class. Total Exemption. Taxable Rate. Net Shares. Shares. Tax. -------------- ------------- ------ --------- ---------- --------- ----- ------ (1) Elizabeth L. Beidler ..... wife 2 $749,5- $10,000 00 $739,5- 1 $ - 12 07 12 07 200 00 2 - 400 00 3 1,- 200 00 4 2,- 800 00 5 7,- 500 00 6 26,- 370 72 ------ $38,- 470 72 (2) Francis Beidler ......... son 4 500,0- 5,000 00 495,0- 1 - 00 00 00 00 200 00 2 - 400 00 3 1,- 200 00 4 2,- 800 00 5 7,- 500 00 6 11,- 700 00 ------ $23,- 800 00 (3) Elizabeth L. Beidler ... daughter 4 500,0- 5,000 00 495,0- same as No 00 00 00 00 2 or $23,- 800 00 (4) The Francis Beidler Charitable Trust .......... none 7 499,0- 200 00 498,8- 4 - 24 15 24 15 800 00 6 1,- 200 00 8 3,- 200 00 10 7,- 000 00 12 18,- 000 00 14 27,- 835 38 ------ $58,- 035 38 ------------- ------ --------- ---------- --------- ----- ------ $2,248,5- $20,200 00 $2,228,3- $144,- 36 22 36 22 106 10 -------------------------------------------------------------------------------

Arthur B. Schaffner, of Chicago, Ill., and Hendersons & Salley, of Aiken, for appellants.

John M Daniel, Atty. Gen., and J. Fraser Lyon and N. A. Turner, both of Columbia, for respondent.

RAMAGE, A. A. J.

This is an appeal from the decision of South Carolina tax commission imposing an inheritance tax on certain assets of the estate of Francis Beidler, deceased.

On March 4, 1924, Francis Beidler, a resident of Chicago, in the state of Illinois, died in said state, leaving of force his last will and testament, which was duly probated in the probate court of Cook county, Ill., and Francis Beidler, II, and George Engelking thereafter duly qualified and are now acting as executors of said estate. At the time of his death, the said decedent owned, among other personal property, the following, as to which an inheritance tax has been assessed by the South Carolina tax commission, to wit, 8,000 shares of the capital stock of Santee River Cypress Lumber Company, a South Carolina corporation, which, by agreement reached between the tax commission and the attorneys for the executors has been valued for the purpose of the assessment of the South Carolina inheritance tax at $204 per share, or $1,632,000. The balance of the stock in said lumber company is owned by the widow and children of the decedent, Mrs. Elizabeth Beidler, owning 2,000 shares, Francis Beidler, II, 2,500 shares, and Elizabeth Beidler, Jr., 2,500 shares.

In addition thereto, said Santee River Cypress Lumber Company was indebted to the decedent at the time of his death in the sum of $556,864.22, for advances theretofore made by him to said company, and in the sum of $64,672 for dividends previously declared by the said company on the shares of stock above described. Said indebtedness was an open unsecured book account, which was entered upon the books of the Santee River Cypress Lumber Company, kept at Eutawville, S.C. Mr. Beidler also kept a complete set of personal books in Chicago, upon which appear entries of said amounts being due him by Santee River Cypress Lumber Company, except the item of $64,672 dividends.

The executors of the said estate filed with the South Carolina tax commission, as required by the Inheritance Tax Law of the state of South Carolina (Act Feb. 23, 1922 [32 St. at Large, p. 800]), an affidavit, setting out in said affidavit all of the above assets, but specifically claiming and submitting that the two items of $556,864.22 and $64,672 above referred to were not on March 4, 1924, taxable under the laws of South Carolina then existing.

On July 25, 1925, the South Carolina tax commission levied an inheritance tax upon all of the above assets amounting to a tax of $144,106.10.

The executors filed with the tax commission Cahill's Revised Statutes of the State of Illinois, paragraphs 10, 11, 12, 13, of chapter 41 (see Cahill's Rev. St. 1929, c. 41), showing the right of a widow to renounce a will of a husband in the state of Illinois, and her right, after so renouncing, to take absolutely one-third of all the personalty of his estate; the executors also filed a certified copy of Mrs. Francis Beidler's renunciation of the will of her husband, and her election to take her legal share under the statute. In accordance therewith, the South Carolina tax commission have in distributing the estate in South Carolina, for the purpose of the assessment of the South Carolina inheritance tax, assigned one-third of the estate in South Carolina to Mrs. Beidler; from which no appeal is taken.

The value of the estate outside of South Carolina has not been ascertained by the South Carolina tax commission, but, for the purpose of this appeal, it is agreed that it was large and valuable, probably approximating $1,000,000.

The following are the issues:

1. Are the items above referred to, of $556,864.22 and $64,672, taxable herein?

2. Is the Federal estate tax allowable as a deduction herein?

3. Are the executors entitled to an exemption, in favor of the Francis Beidler charitable trust fund, of $6,000 or only $200?

4. Does 10 per cent. interest on the South Carolina inheritance tax start to run on July 31, 1925, or on January 28, 1926?

We shall now consider the first question as to the tax on the debt and on the dividends. First as to the debt: "Upon the other hand, it is very generally held in this country, unless the terms of the statute forbid, that a succession or inheritance tax is payable in respect of the personal property belonging to the estate of a nonresident decedent, where such property, or the evidence thereof, is physically present within the taxing state, at least, if not there for a mere temporary presence." Note to 46 L. R. A. (N. S.) at page 1168, citing Blackstone v. Miller, 188 U.S. 189, 23 S.Ct. 277, 47 L.Ed. 439, and Gallup's Appeal, 76 Conn. 617, 57 A. 699, and other cases.

"Bonds of a foreign corporation, as well as bonds and certificates of stock of domestic corporations, when deposited in a safe-deposit vault within the state, although owned by a nonresident, are 'property within the state,' within the meaning of the transfer tax act of 1892." In re Estate of Whiting, 150 N.Y. 27, 44 N.E. 715, 34 L. R. A. 232, 55 Am. St. Rep. 640.

"Money of a nonresident, deposited by him in a bank within the state, although commingled with trust funds in an account opened by him as trustee, constitutes 'property within the state,' within the meaning of the New York transfer tax act of 1892, which includes property of a nonresident decedent if within the state." In re Estate of Houdayer (Deed) 150 N.Y. 37, 44 N.E. 718, 34 L. R. A. 235, 55 Am. St. Rep. 642.

The Court goes on to say: "What was the real thing--the essence of the transaction-- that gives rise to this controversy? The decedent brought his money into this state, deposited it in a bank here, and left it there until it should suit his convenience to come back and get it. *** It was an investment in this state, subject to attachment by creditors. If not voluntarily repaid, he could compel payment through the courts of this state. The depositary was a resident corporation, and the receiving and retaining of the money were corporate acts in this state. Its repayment would be a corporate act in this state. Every right springing from the deposit was created by the laws of this state. Every act out of which those rights arose was done in this state. In order to enforce those rights, it was necessary for him to come into this state. ...