City Bank Farmers Trust Co v. Schnader

Citation79 L.Ed. 228,55 S.Ct. 29,293 U.S. 112
Decision Date05 November 1934
Docket NumberNo. 30,30
PartiesCITY BANK FARMERS' TRUST CO. v. SCHNADER, Attorney General of Pennsylvania, et al
CourtUnited States Supreme Court

Appeal from the District Court of the United States for the Eastern District of Pennsylvania.

Messrs. Henry S. Drinker, Jr., and Leslie M. Swope, both of Philadelphia, Pa., for appellant.

[Argument of Counsel from pages 113-115 intentionally omitted] Mr. Wm. A. Schnader, of Philadelphia, Pa., for appellees.

Mr. Justice BUTLER delivered the opinion of the Court.

The Pennsylvania inheritance tax law imposes a tax upon the transfer by will or intestate laws of personal property within the commonwealth when the decedent is a nonresident at the time of his death.1 Thomas B. Clarke, a resident of New York, loaned paintings to a museum in Pennsylvania and died testate while they were on exhibition there. His will was admitted to probate in New York, and letters testamentary issued to appellant to which, as trustee, the residuary clause transferred the pictures. The appellees, acting respectively as Attorney General and secretary of revenue of Pennsylvania, proceeded to appraise and assess the pictures for the purpose of collecting the inheritance tax.

Appellant, maintaining that when the owner died the paintings had no actual situs within Pennsylvania because only temporarily there, brought this suit to enjoin enforcement on the ground that, if the statute be construed to tax the transfer by the death of the nonresident owner, it is repugnant to the due process clause of the Fourteenth Amendment. As the transfer cannot be subjected to taxes imposed by more than one state (Frick v Pennsylvania, 268 U.S. 473, 488—492, 45 S.Ct. 603, 69 L.Ed. 1058, 42 A.L.R. 316; Safe Deposit & T. Co. v. Virginia, 280 U.S. 83, 93, 50 S.Ct. 59, 74 L.Ed. 180, 67 A.L.R. 386; Farmers' Loan & Trust Co. v. Minnesota, 280 U.S. 204, 210, 50 S.Ct. 98, 74 L.Ed. 371, 65 A.L.R. 1000; First National Bank v. Maine, 284 U.S. 312, 326, 327, 52 S.Ct. 174, 76 L.Ed. 313, 77 A.L.R. 1401), appellant framed its complaint to call for a decision whether Pennsylvania or New York is entitled to the tax. The New York tax commission as amicus curiae filed briefs below and also in this court supporting the claim that the transfer is subject to the New York tax.

The District Court, consisting of three judges, section 266, Jud. Code (28 USCA § 380) dismissed the suit on the ground that appellant had an adequate remedy at law. This court reversed and remanded the case, with instructions to reinstate the bill and proceed to a hearing upon the merits. City Bank Farmers' Trust Co. v. Schnader, 291 U.S. 24, 54 S.Ct. 259, 78 L.Ed. 628. Then the case was submitted and tried on the facts alleged in the bill and answer and additional ones that were stipulated by the parties. Upon the circumstances detailed in its findings, the court concluded that 79 portraits belonging to Clarke that were included in the collection on exhibition in the Pennsylvania museum at the time of his death then had an actual situs in that state, and held the transfer subject to the Pennsylvania inheritance tax.

The material substance of the findings follows:

In March, 1928, Clarke, at the request of the director of the Pennsylvania museum, loaned to it the 79 pictures, together with 85 others owned by a corporation of which he was sole stockholder. At the time of the loan, they were, and long had been kept, in New York City; 5 were at his residence, 10 were on exhibition, and the remaining 64 were in storage. When the pictures were sent to Pennsylvania, Clarke surrendered his lease for the storage space, and thereafter did nothing to secure another place in which to put them. But suitable space was always readily available in New York.

The arrangement with the museum was oral; no consideration was to be paid; and it was understood that at any time on Clarke's request the pictures would be returned to him. In the spring of 1929, Clarke wrote the director, at the latter's solicitation, that he would sell the entire collection at a stated price to any one who would present it to the museum; it being understood that he would allow the pictures to remain at the museum for a reasonable time for the director to find such a donor. In May, 1930, he stated that this arrangement would terminate June 17, 1930. But at the director's request he permitted the pictures to remain, upon the understanding that, whenever he so requested, they would be returned to him in New York. Thereafter, he was willing to sell the collection as a whole for presentation to the Pennsylvania museum or to a substantially similar institution.

Clarke made no definite plans or request for the return to New York of the paintings. None was ever removed from the museum except 4, which, at his request, were sent to Virginia in April, 1929, for exhibition and were returned in May. When he died, January 18, 1931, all the paintings were at the museum.

The museum was not conducted for profit. It secured through voluntary loans from nonresidents a substantial portion of the works of art which it displayed. None of these was regarded or intended as a permanent loan. It is customary for public museums to secure pictures for exhibition in this manner. The period elapsing until Clarke's death was shorter than the usual period of such loans.

The power to regulate the transmission, administration, and distribution of tangible personal property rests exclusively in the state in which the property has an actual situs, regardless of the domicile of the owner. If at the time of his death the actual situs of Clarke's pictures was in Pennsylvania, they were wholly under the jurisdiction of that state. The fact that, being a resident of New York, he, by will probated in that...

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