Bliss v. Bliss

• Decision Date: 22 May 1915
• Citation: 109 N.E. 148,221 Mass. 201
• Parties: BLISS et al. v. BLISS et al. SAME v. STEVENS, Treasurer and Receiver General.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

221 Mass. 201

109 N.E. 148

BLISS et al. v. BLISS et al.

SAME v. STEVENS, Treasurer and Receiver General.

Supreme Judicial Court of Massachusetts, Suffolk

May 22, 1915

Case Reserved from Supreme Judicial Court, Suffolk County.

Petitions by Cornelius N. Bliss, Jr., and others, executors of Cornelius N. Bliss, deceased, against Cornelius N. Bliss Jr., and others, and against Elmer A. Stevens, Treasurer and Receiver General, for determination of liability for succession taxes. There was a decree of the probate court in each case, and the causes reserved for the full court on the pleadings, decree, claims of appeal therefrom and objections thereto, and agreed statement of facts. Reversed and entered.

COUNSEL

Henry C. Attwill, Atty Gen., and Wm. Harold Hitchcock and Arthur E. Seagrave, Asst. Attys. Gen., for treasurer and receiver general.

Thos Nelson Perkins and Benjamin Loring Young, both of Boston, for other respondents.

OPINION

RUGG C.J.

1. The first question presented is whether certain promissory notes executed by a copartnership known as Bliss, Fabyan & Co. to the order of Cornelius N. Bliss and owned and kept by him in New York, the state of his domicile, are subject to a succession tax in this commonwealth, he having deceased testate, a resident of New York in October, 1911. Bliss, Fabyan & Co., the makers of the notes, were at the date of the death of the testator, wholesale dry goods merchants with offices in the cities of Boston, New York and Chicago. The testator, a resident of New York, was senior partner, one other partner was domiciled in New York, one in Chicago and two in Massachusetts. The copartnership articles of Bliss, Fabyan & Co. in effect of the date of the testator's death provided that the death of any partner should not dissolve the partnership, so far as concerned the other partners, but that the surviving partners should carry on the business with the right to use the firm name and be entitled to its good will. The accounts of the New York and Boston offices of the copartnership were kept separately;

the Chicago office being treated as a branch of the New York office, complete records of the firm being kept only in Boston. Under the laws of the state of New York action could have been brought in that state upon the notes of the copartnership held by the decedent, and judgment had for the amount due on the notes. There were at the time of the death of the testator assets of the copartnership in the state of New York applicable to the satisfaction of such a judgment sufficient in amount to meet the same, and the notes could have been collected by the estate of the testator in New York without the aid of the courts of this commonwealth. The notes were in fact paid by checks drawn and signed in Boston and mailed to the executors of the testator in New York. The notes also were drawn and made payable in Boston.

The governing statute is St. 1909, c. 490, pt. 4, § 1, as amended by St. 1909, c. 527, § 1 (the death of the decedent having occurred prior to the enactment of St. 1912, c. 678), which provides that:

'All property within the jurisdiction of the commonwealth, corporeal or incorporeal, and any interest therein, whether belonging to inhabitants of the commonwealth or not, which shall pass by will, * * * shall be subject to a tax. * * *'

We are of opinion that these notes are not subject to the tax. They were not physically within the commonwealth at the time of the death of their owner. They were the property of an owner who was not a resident of this commonwealth but who was domiciled in a sister state. Promissory notes are intangible property. The situs of such property commonly is at the domicile of its owner. The extent of the power of a state, whatever it may be, to declare the situs of such property physically within its borders for the purpose of levying a tax on it (Buck v. Beach, 206 U.S. 392, 27 Sup.Ct. 712, 51 L.Ed. 1106, 11 Ann.Cas. 732; Wheeler v. New York, 233 U.S. 434), is not involved here because the notes were not in this commonwealth at the time of the death of their owner. If it be assumed that the situs of a simple debt may be declared by the sovereign power to be at the domicile of the debtor, that does not control the decision of the point now presented. The maker of these notes was a partnership. It had a place of business, ample assets to meet the obligations, and a resident partner, within the state of New York upon whom legal service could be made binding enough property of the partnership to secure the payment of the notes. There was no occasion for the creditor to resort to our courts to give validity to the notes. The creditor did not and did not need to depend upon our law for the collection of his debt. The circumstance that for some purposes the office of the partnership in Boston was treated as its principal or home office, has no decisive effect. It was not the place to which the creditor was required to come to collect his debt. Not does the fact that the notes were made in Boston and were payable there necessarily give them a situs for taxation purposes in Massachusetts. State Tax on Foreign Held Bonds, 15 Wall. 300, 21 L.Ed. 179. The mere accident that for other reasons the executors of the will of the owner of these notes resort to our courts does not of itself confer jurisdiction to impose a succession tax on these notes. The doctrine of Blackstone v. Miller, 188 U.S. 189, 23 Sup.Ct. 277, 47 L.Ed. 439, does not reach to a case like the present. The tax sought to be collected is a succession tax. It is apparent that the succession of these notes or their proceeds does not depend under the circumstances here disclosed in any degree upon the moral or legal support or actual assistance of our laws. The sovereign power of this commonwealth could not by any effort reach to the persons of the copartnership in such way as to prevent, or regulate practically in any particular, the succession of these notes, or their proceeds, when collected, from the debtor to the estate of the testator or from that estate to the legatees. New York has complete jurisdiction over the notes both because physically they are there and the owners, the executors, are domiciled there, and because the partnership maker of the notes has one of its usual places of business, a large amount of its property and the domicile of one of its members in that state. The law of Massachusetts does not need to be invoked in any respect. The sanction of the law of New York alone gives completion to the succession from its beginning to its end. Hence without considering other aspects of this contention there is no sound foundation for any succession tax in this commonwealth. This conclusion is in harmony with Matter of Gordon, 186 N.Y. 471, 79 N.E. 722, 10 L.R.A.(N.S.) 1089.

2. The next point to be decided is whether a registered bond of the commonwealth owned by a nonresident and kept at his domicile is subject to the succession tax. That point never has been decided in this commonwealth. Kinney v. Treasurer & Receiver General, 207 Mass. 368, 93 N.E. 586, 35 L.R.A.(N.S.) 784, Ann.Cas. 1912A, 902. In that case it was said by Knowlton, C.J., at page 369 of 207 Mass., at page 587 of 93 N.E., 35 L.R.A.(N.S.) 784, Ann.Cas. 1912A, 902, respecting our succession tax law:

'This language indicates an intention on the part of the Legislature to tax all property that it has the power to tax. The statute is as broad as the jurisdiction of the commonwealth.'

See, also, Peabody v. Treasurer & Receiver General, 215 Mass. 129, 102 N.E. 435. That must be accepted as the meaning of the tax act in the case at bar.

It was held in Blackstone v. Miller, 188 U.S. 189, 23 Sup.Ct. 277, 47 L.Ed. 439, that for purpose of a succession tax a simple debt and a deposit in a trust company were property within the jurisdiction of New York, which was the state of the debtor although the creditor was a nonresident. It there was said:

'If the transfer of the deposit necessarily depends upon and involves the law of New York for its exercise, or, in other words, if the transfer is subject to the power of the state of New York, then New York may subject the transfer to a tax. * * * But it is plain that the transfer does depend upon the law of New York, not because of any theoretical speculation concerning the whereabouts of the debt, but because of the practical fact of its power over the person of the debtor. * * * Power over the person of the debtor confers jurisdiction.'

It is not necessary to determine whether that declaration of law can be wrested from its application to the facts of a simple debt, then before the court, and made applicable broadly to debts manifested by bonds or notes. The peculiar circumstance of a registered bond of the state itself differentiates the case at bar from that general class. Applying the test quoted above from Blackstone v. Miller to the registered bond of the commonwealth, it results in holding it subject to the transfer tax. The commonwealth cannot be sued on the bond in the federal courts. Article 11 of amendments to United States Constitution. The commonwealth can be impleaded only in its own courts. R. L. c. 201; McArthur Bros. Co. v. Commonwealth, 197 Mass. 137, 83 N.E. 334; Smith v. Reeves, 178 U.S. 436, 20 Sup.Ct. 919, 44 L.Ed. 1140. The bond could not be collected by any process in the courts except by invoking Massachusetts law. The bond being registered can only be transferred by bringing it to the proper registration officer of this commonwealth and there complying with the law of the commonwealth respecting transfer of registration.

It follows from the fact that this is a registered bond of the Benwell v. Newark, 55 N.J.Eq. 260, 263, 36 A. 668.

Since the tax is...