Ferdinand Eidman v. Miguel Martinez

• Decision Date: 17 March 1902
• Docket Number: No. 287,287
• Citation: 46 L.Ed. 697,22 S.Ct. 515,184 U.S. 578
• Parties: FERDINAND EIDMAN, Collector, etc., v. MIGUEL R. MARTINEZ, Administrator, etc
• Court: U.S. Supreme Court

184 U.S. 578

22 S.Ct. 515

46 L.Ed. 697

FERDINAND EIDMAN, Collector, etc.,

v MIGUEL R. MARTINEZ, Administrator, etc.

No. 287.

Argued November 21, 1901.

Decided March 17, 1902.

This case came up upon certain questions of law arising in an action brought in the circuit court for the southern district of New York by Martinez, as ancillary administrator with the will annexed of the estate of Salvador Elizalde, against the collector of internal revenue, for the refund of an inheritance tax paid to the defendant upon certain personal property in the city of New York.

The facts out of which the questions arose are as follows:

Salvador Elizalde, a nonresident alien, a subject of the King of Spain, who had never resided within the United States, died in Paris, France, on April 27, 1899, leaving a will in the Spanish language, executed in Paris, in the year 1891, pursuant to the laws of Spain. This will was filed and protocolized in the office of the Spanish counsel in Paris, and thereby under the laws of Spain and the consular convention or treaty between Spain and France, Arturo Elizalde, the sole legatee under said will, became entitled to the possession and administration of all the personal property of the decedent. Said Arturo Elizalde is the only son and sole next of kin of the decedent, and is a nonresident alien and a Spanish subject. He has resided all his life in Spain and France, and has never resided in the United States. Said will purports to give all of the personal property of the decedent to his said son, but, by the laws of Spain, only one third of the property passed by the will, and the remaining two thirds passed to said son by and under the Spanish intestate law.

The decedent left certain Federal, municipal, and corporate bonds, of the par value of $225,400, in the custody of his agents in the city of New York, and they were within the third collection district of New York at the date of his death.

After the filing of said will in Paris, Arturo Elizalde entered upon the administration of the decedent's personal estate, and appointed the defendant in error, Miguel R. Martinez, his attorney for the purpose of receiving ancillary letters of administration with the will annexed in the state of New York, and such letters were issued to him by the surrogate of New York county. After receiving such letters, said Martinez took possession of said bonds.

The United States Commissioner of Internal Revenue, under the alleged authority of the 29th and 30th sections of the act of Congress of June 13, 1898, entitled 'An Act to Provide Ways and Means to Meet War Expenditures and for Other Purposes,' assessed an internal revenue tax of $4,293.76 upon a legacy and distributive share arising from personal property in the hands of the administrator, defendant in error, who paid said tax to United States collector of internal revenue for the third district of New York, plaintiff in error, under protest and upon compulsion of the collector's threat of distraint and sale, and made the statutory application for its refund to the Commissioner of Internal Revenue, who rejected the application. The administrator then brought this action in the circuit court of the United States for the southern district of New York against the collector to recover the amount of the tax.

The collector demurred; the demurrer was overruled, and a final judgment entered against the collector for the amount claimed, with interest and costs. The collector then brought the action into the circuit court of appeals, which certified to this court the following questions of law arising out of the foregoing facts:

'1. Is any tax or duty imposed by the 29th and 30th sections of the act of Congress of June 13, 1898, entitled 'An Act to Provide Ways and Means to Meet War Expenditures and for Other Purposes,' upon the passing of any legacy arising out of the personal property of a nonresident alien who has never resided or had a domicil within the United States, and who dies without the United States in the year 1899, leaving a will made and executed at his foreign domicil, pursuant to the laws thereof, by which he gives all his property to a nonresident alien legatee, and who leaves certain personal property within the state of New York exceeding $10,000 in value?'

'2. Is any tax or duty imposed by the 29th and 30th sections of the act of Congress of June 13, 1898, entitled 'An Act to Provide Ways and Means to Meet War Expenditures and for Other Purposes,' upon the passing of any distributive share arising out of the personal property of a nonresident alien who has never resided or had a domicil within the United States, and who dies without the United States, in the year 1899, intestate, and by the law of his foreign domicil all of his personal property passes to his son, also a nonresident alien, and who leaves certain personal property within the state of New York, exceeding $§0,000 in value?'

Solicitor General Richards for collector.

Messrs. Wheeler H. Peckham, John G. Carlisle, Wm. E. Curtis, and Henry M. Ward for Martinez.

Mr. Justice Brown delivered the opinion of the court:

This case raises the question whether the inheritance-tax law of the United States applied, in 1899, to the intangible personal property of a nonresident alien who never had a domicil in the United States and died abroad,—such personal property being within the United States and having passed to his son, also an alien domiciled abroad, as sole legatee and next of kin of the deceased, partly under a will executed abroad and partly under the intestate laws of Spain.

By the 29th section of the war tax law of June 13, 1898 (30 Stat. at L. 448, 464, chap. 448), 'any person or persons having in charge or trust, as administrators, executors, or trustees, any legacies or distributive shares arising from personal property . . . passing . . . from any person possessed of such property, either by will or by the intestate laws of any state or territory, . . . shall be, and hereby are, made subject to a duty or tax,' etc.

The ancient maxim of the law, Mobilia sequuntur personam, was the outgrowth of conditions which have largely ceased to exist, and of an age when personal property consisted principally of articles appertaining, as the name indicates, to the person of the owner, such as gold and silver, jewels, apparel, and less immediately to horses, cattle, and other animals, and to the products of the farm and the shop. As this property was, in primitive times, usually kept under the personal supervision of the owner, and was often carried about by him on his journeys (as it often still is in Oriental countries), the principle became incorporated in the law that its locality was determined by the domicil of the owner, and that his rights with respect to such property were fixed by the law of that domicil.

While the enormous increase in the amount and variety of personal property during the past century has necessitated certain limitations of the maxim, particularly in matters of taxation, it is by no means obsolete. It is still the law that personal property is sold, transmitted, bequeathed by will, and is descendible by inheritance according to the law of the domicil; and not by that of its situs. Cross v. United States Trust Co. 131 N. Y. 330, 15 L. R. A. 606, 30 N. E. 125; Ennis v. Smith, 14 How. 424, 14 L. ed. 483; Dammert v. Osborn, 141 N. Y. 564, 35 N. E. 1088. In matters of taxation, however, and of subjecting the personal property of nonresidents to the claims of local creditors of the owner, serious encroachments have been made upon the ancient maxim, and a rule has grown up in modern times that legislatures may deal with the personal as well as with the real property of nonresidents within their jurisdiction, and that such property, while enjoying the protection and benefits of the local law, may be taxed for the expenses of the local government. These doctrines have found expression in a large number of cases in this court. Green v. Van Buskirk, 5 Wall. 307, 18 L. ed. 599, 7 Wall. 139, 19 L. ed. 109; Hervey v. Rhode Island Locomotive Works, 93 U. S. 664, 23 L. ed. 1003; Walworth v. Harris, 129 U. S. 355, 32 L. ed. 712, 9 Sup. Ct. Rep. 340; Security Trust Co. v. Dodd, 173 U. S. 624, 43 L. ed. 835, 19 Sup. Ct. Rep. 545, and cases there cited.

Recent cases in this court have affirmed very broadly the right of the legislature to tax the local property of nonresidents, and particularly of corporations who are permitted by comity to do business within the state. Delaware Railroad Tax, 18 Wall. 206, sub nom. Minot v. Philadelphia, W. & B. R. Co. 21 L. ed. 888; Erie R. Co. v. Pennsylvania, 21 Wall. 492, 22 L. ed. 595; Western U. Teleg. Co. v. Atty. Gen. 125 U. S. 530, 31 L. ed. 790, 8 Sup. Ct. Rep. 961; Marye v. Baltimore & O. R. Co. 127 U. S. 117, 32 L. ed. 94, 8 Sup. Ct. Rep. 1037; Pullman's Palace Car Co. v. Pennsylvania, 141 U. S. 18, 35 L. ed. 613, 3 Inters. Com. Rep. 595, 11 Sup. Ct. Rep. 876; Adams Exp. Co. v. Ohio State Auditor, 166 U. S. 185, 41 L. ed. 965, 17 Sup. Ct. Rep. 604. The same principle has been applied not only to tangible property but to credits and effects. Tappan v. Merchants' Nat. Bank, 19 Wall. 490, 22 L. ed. 189; Savings & L. Soc. v. Multnomah County, 169 U. S. 421, 42 L. ed. 803, 18 Sup. Ct. Rep. 392; New Orleans v. Stempel, 175 U. S. 309, 44 L. ed. 174, 20 Sup. Ct. Rep. 110; Bristol v. Washington County, 177 U. S. 133, 44 L. ed. 701, 20 Sup. Ct. Rep. 585.

The question in each case is not of the power of the legislature to tax the personal property of nonresidents, both tangible and intangible, since that is well established both in England and America (Mager v. Grima, 8 How. 490, 12 L. ed. 1172), but of its intent to do so by the particular act in question. The inheritance-tax law of the United States above cited applies to property 'passing by will or by the intestate laws of any state or territory.' As the property in this case...