Bullen v. State (In re Bullen's Estate)

• Decision Date: 25 October 1910
• Citation: 143 Wis. 512,128 N.W. 109
• Parties: IN RE BULLEN'S ESTATE. BULLEN ET AL. v. STATE ET AL.
• Court: Wisconsin Supreme Court

143 Wis. 512

128 N.W. 109

IN RE BULLEN'S ESTATE.BULLEN ET AL.

v.STATE ET AL.

Supreme Court of Wisconsin.

Oct. 25, 1910.

Appeal from Circuit Court, Waukesha County; Martin L. Lueck, Judge.

An inheritance tax having been fixed on the estate of George Bullen, the estate and others and the state appeal. Affirmed.

The circuit court for Waukesha county fixed an inheritance tax upon the estate of George Bullen, deceased, at $20,184.71. The Bullen heirs and the state appealed, which appeals were heard together. It appears from the established facts that George Bullen, a citizen of Wisconsin, died at his home near Oconomowoc September 10, 1908, aged 62 years. He left a widow and four sons, three of whom are minors. At the time of his death, he had on deposit in checking accounts in Chicago banks $12,109.77, and was possessed of his home known as “Minnewoc” in Waukesha county, valued at $56,000, and the chattels appurtenant thereto, agreed to be worth $20,000. The remaining property in which Mr. Bullen had any interest prior to his death consisted of certain stocks, bonds, notes, life insurance policies, etc., the title to which was vested in the Northern Trust Company, an Illinois corporation, as trustee, for the benefit of Mrs. Bullen and her four sons, who now appeal, and of Lucy E. Cleghorn, Annie Graham, Mary T. Harris, Victoria Bullen, and Helen Mary Harris, all nonresident aliens. They did not, nor did the Northern Trust Company, appear in either of the courts below or join in this appeal. No personal service was ever had on any of them. The Illinois property held by the Northern Trust Company, exclusive of the $25,000 insurance policy, was valued at $936,761.70. In 1892 Mr. Bullen who formerly lived in Chicago, moved to Oconomowoc, but continued to transact some business in Chicago down to the time of his death. In 1900 he began negotiations with the Northern Trust Company, with a view of transferring his property to it under a trust agreement. Various drafts of the instrument were made and discussed by the parties down to December 11, 1902, when an agreement denominated, “An assignment in trust,” was entered into in Chicago, and the bonds, stocks, notes, insurance policies, and other securities therein mentioned were delivered to the trust company. The transfer of the securities was made on the date last mentioned by the delivery to the Northern Trust Company of the assignment in trust, together with the securities themselves. Such of the securities as did not pass by delivery were also assigned by independent instruments, such as the usual indorsement on a stock certificate, and the usual form of assignment of insurance policy. The trust assignment was dated December 11, 1902, and the receipt of the Northern Trust Company appended to it bears the same date. A certificate of acknowledgment, however, was made afterwards on April 4, 1903. These securities had always been in a safety deposit box in Chicago, and the legal title to them was held by the trustee at the time of Mr. Bullen's death, and the securities themselves had never been within the state of Wisconsin. The assignment in trust provided for the investment and reinvestment of the trust estate, and directed the payment of $900 per annum to Lucy E. Cleghorn, a niece, and $900 per annum to Annie Graham, a sister, both of whom resided out of the United States at the time of Mr. Bullen's death. It directed the trustee to pay the cost of maintenance of a house in London, Canada, during the lives of Mr. Bullen's two sisters, Mary T. Harris and Victoria Bullen, and his niece Helen Mary Harris. It directed the trustee to hold his house and farm, known as “Minnewoc,” and the chattels appurtenant thereto, and to spend the necessary amount in maintaining them for the benefit of Mrs. Bullen and the children. It gave to Mrs. Bullen for life one-third of the remainder of the income from the trust estate, and directed that the other two-thirds should be paid to Mr. Bullen during his lifetime and after his death should be set apart for his four sons, and it directed the distribution of the principal to the sons, each to have one-third of his share when he should reach the age of 25 years, and the other two-thirds when he should reach the age of 30 years. It reserved the right to direct and control the distribution of the trust property, and to revoke and vacate the trust at any time during Mr. Bullen's lifetime. Mr. Bullen, having technically repossessed himself of the securities for a brief period, executed a further assignment in trust, dated May 22, 1907, but the manual possession of the securities had remained at all times since 1902 with the Northern Trust Company; Mr. Bullen having repossessed himself of them merely by directing the trust company to hold them for him as his agent instead of trustee. Prior to the death of George Bullen, the Northern Trust Company made returns to the tax assessors of Cook county, Ill., of the value of the trust estate, and paid the taxes thereon levied on the valuation made by said assessors. The trust company also paid after Mr. Bullen's death an inheritance tax on all of said property in Illinois, including the bank deposits. When the assignment in trust was drawn, Mr. Bullen was suffering from locomotor ataxia, and was aware of the fact. Mrs. Bullen was also in ill health; and the fourteenth paragraph of the trust agreement declares the intention of giving the trustee “full power and authority to manage the said trust estate for the benefit of the several beneficiaries thereof, particularly my said wife during her lifetime, in the event I should be unable, at any time prior to my death, to give my affairs such attention as they may demand, and at all events, after my death, in like manner as I myself might or could manage it, if living and in good health.” The sixteenth paragraph provides for the distribution of any trust estate not specifically disposed of “among my heirs at law, as provided by the laws of Illinois with reference to intestate property, and the laws of said state shall govern in the interpretation of this instrument.” In addition to the personal property which passed under the assignment in trust there was certain real estate, one parcel of which “Minnewoc,” Mr. Bullen's residence, is located in Wisconsin. Mrs. Bullen declined to sign the deeds of the real estate, refusing to relinquish her dower and other rights therein, unless Mr. Bullen should make some provision in the trust assignment for an income for her mother. Mrs. Bullen refused at first to assign the insurance policy for $25,000, and the policy, being payable to her, could not be transferred without her consent. She finally reached an agreement as to this policy with Mr. Bullen and executed the assignment of it. The deeds having never been signed, the deed of “Minnewoc” to the trustee did not pass the homestead rights. The Northern Trust Company, having no right to do business in Wisconsin, has confined itself to the trust estate delivered to it in Illinois, and has avoided coming within the jurisdiction of this court. The only interested parties over whose persons the court has jurisdiction are Mary Lenore Bullen, and her four sons, the three minors appearing through Mr. Newbury, their guardian ad litem.

Ritsher, Montgomery, Hart & Abbot, John R. Montgomery, Frame & Blackstone, and C. W. Newbury, for plaintiffs.

F. L. Gilbert, Atty. Gen., Russell Jackson, Deputy Atty. Gen., and A. C. Titus, First Asst. Atty. Gen., for defendants.

KERWIN, J. (after stating the facts as above).

We shall first consider the appeal on the part of the Bullen heirs. Counsel say in their brief that there is but one question for determination by this court, namely, “Can the state of Wisconsin tax a contract made by one of its residents when in a foreign state, whereby he transfers property which is then in the foreign state, and which never has been in the state of Wisconsin, even though constructively the transfer was intended to take effect in possession or enjoyment at or after the death of the transferror?' ” It is argued that the tax is not a tax of property, but an excise tax imposed on the transfer, and, the transfer being made in a foreign state of property within that state, this state cannot tax such property held by the Northern Trust Company. It is said that the tax is “not a tax on the person who transmits, or the person who receives, but it is a tax on the right of transmission.” This question was considered and discussed by this court in Nunnemacher v. State, 129 Wis. 190, 108 N. W. 627, 9 L. R. A. (N. S.) 121, and the conclusion arrived at after a review of the authorities that inheritance taxes are not taxes upon property, “but upon the right to receive property.” And in Beals v. State, 139 Wis. 552, 121 N. W. 348, this court, referring to the Nunnemacher Case, said: “Inheritance taxation was held to be constitutional in the Nunnemacher Case on the ground that it is excise taxation levied on the transfer of property, and not on the property itself. * * *” And in summing up the points decided the court said: “The inheritance tax levied by chapter 44, Laws 1903, is not a tax upon property or property rights in any sense, but purely an excise tax levied upon the ‘transfer’ or transaction, and merely measured in amount by the amount of the property transferred.” Again, in State v. Pabst, 139...