First Nat Bank of Boston v. State of Maine

Citation284 U.S. 312,52 S.Ct. 174,77 A.L.R. 1401,76 L.Ed. 313
Decision Date04 January 1932
Docket NumberNo. 171,171
CourtUnited States Supreme Court

Messrs. Leonard A. Pierce, Charles L. Hutchinson, and Herbert J. Connell, all of Portland, Me., and Franklin Fisher, of Lewiston, Me. (Messrs. Cook, Hutchinson, Pierce & Connell, of Portland, Me., and Marion H. Fisher, of Jamestown, N. Y., of counsel), for appellant.

[Argument of Counsel from pages 313-315 intentionally omitted] Messrs. Clement F. Robinson, Atty. Gen., and Nathan W. Thompson, of Portland, Me., for the State of Maine.

[Argument of Counsel from pages 316-320 intentionally omitted] Messrs. Henry N. Benson, Atty. Gen., and John F. Bonner and William K. Montague, Asst. Attys. Gen., for the State of Minnesota, amicus curiae.

Mr. Seth W. Cole, of Albany, N. Y., for Tax Commission of State of New York, amicus curiae.

Messrs. Russell L. Bradford and Taylor, Blane, Capron & Marsh, all of New York City, for City Bank Farmers' Trust Co., amicus curiae.

Messrs. John M. Perry, of New York City, Samuel W. Fordyce and Thomas W. White, both of St. Louis, Mo., and Henry J. Richardson, of Washington, D. C. (Messrs. Larkin, Rathbone & Perry, of New York City, and Fordyce, Holliday & White and C. P. Fordyce, all of St. Louis, Mo., of counsel), for executors of James N. Jarvie's Estate, amicus curiae.

Mr. Justice SUTHERLAND delivered the opinion of the Court.

The question presented for our determination by this appeal is whether the state of Maine has power, under the Fourteenth Amendment, to impose a tax upon a transfer by death of shares of stock in a Maine corporation, forming part of the estate of a decedent, who, at the time of his death, was domiciled in the commonwealth of Massachusetts.

The facts which give rise to the question follow. In 1924, Edward H. Haskell died testate, a resident of Massachusetts. The greater part of his property consisted of shares of stock in the Great Northern Paper Company, a Maine corporation, having most of its property in that state. His will was probated in Massachusetts, where the stock, as a part of his estate, had been made liable to an inheritance tax of like character to the inheritance tax in force in Maine. The Massachusetts tax amounted to over $32,000 and was paid on legacies and distributive shares made up in greater part of the proceeds of the paper company stock. Ancillary administration was taken out in a Maine probate court, and an inheritance tax amounting to over $62,000 was assessed under the Maine statutes1 on the property passing by the will. Upon this amount, the tax paid to Massachusetts was allowed as a credit, and an action of debt was brought to recover the balance. Upon an agreed statement embodying the foregoing facts, the case was referred for final decision to the Supreme Judicial Court of the state of Maine, sitting as a law court. That court rendered judgment for the state, holding that the shares of stock were 'within its jurisdiction, and there subject to an inheritance tax, even though the owner was a nonresident decedent, regardless of whether the certificates of stock were at the time of the death in the state of the domicile or in the taxing state'; and that the Fourteenth Amendment thereby was not infringed. 130 Me. 123, 154 A. 103, 108.

Beginning with Blackstone v. Miller, 188 U. S. 189, 23 S. Ct. 277, 47 L. Ed. 439, decisions of this court rendered before Farmers Loan Co. v. Minnesota, 280 U. S. 204, 50 S. Ct. 98, 74 L. Ed. 371, 65 A. L. R. 1000, it may be conceded would preclude a successful challenge to the judgment of the state court. In the first-named case, it was held that a deposit in a New York trust company to the credit of Blackstone, who died domiciled in Illinois, was subject to a transfer tax imposed by New York, notwithstanding the fact that the whole succession, including the deposit, had been similarly taxed in Illinois. That decision was overruled by the Farmers Loan Company Case, and with it, of course, all intermediate decisions so far as they were based on Blackstone v. Miller.

A review of these decisions would serve no useful purpose. While in some of them a restatement of the doctrine of Blackstone v. Miller was unnecessary to a determination of the points presented for consideration, and in others the facts might be distinguished from those of the present case, nevertheless the authority of the Blackstone Case was accepted by all. Frick v. Pennsylvania, 268 U. S. 473, 45 S. Ct. 603, 69 L. Ed. 1058, 42 A. L. R. 316, was one of the latest to approve that case and give countenance to the general doctrine that intangible property (unlike tangible property) might be subjected to a death transfer tax in more than one state; but this and all other instances of such approval, whether express or tacit, with the overthrow of the foundation upon which they rested, have ceased to have other than historic interest.

It was by the Frick Case, however, that the rule became definitely fixed that, as to tangible personal property, the power to tax is exclusively in the state where the property has an actual situs; and this, as will be seen later, has an important bearing on the present case. Mr. Frick, domiciled in Pennsylvania, died testate owning tangible personal property having an actual situs in New York and Massachusetts. His will was probated in Pennsylvania, and a transfer tax was imposed under a Pennsylvania statute which provided for such a tax on all property of a resident decedent, whether within or without the state. Ancillary letters were granted in New York and Massachusetts. We decided, pages 488-492 of 268 U. S., 45 S. Ct. 603, 604, that the Pennsylvania tax, in so far as it was imposed upon the transfer of tangible personalty, having an actual situs in other states, was in contravention of the due process clause of the Fourteenth Amendment. Upon a review of former decisions, it was held: (1) That the exaction of a tax beyond the power of the state to impose was a taking of property in violation of the due process clause; (2) that while the tax laws of a state may reach every object which is under its jurisdiction, they cannot be given extraterritorial operation; and (3) that as respects tangible personal property, having an actual situs in a particular state, the power to subject it to state taxation rests exclusively in that state, regardless of the owner's domicile.

The tax there under consideration was not a property tax, but one laid on the transfer of property on the death of the owner, and, as to that, the court said (page 492 of 268 U. S., 45 S. Ct. 603, 605): 'But to impose either tax the state must have jurisdiction over the thing that is taxed, and to impose either without such jurisdiction is mere extortion and in contravention of due process of law.'

See, also, Union Refrigerator Transit Co. v. Kentucky, 199 U. S. 194, 204, 26 S. Ct. 36, 50 L. Ed. 150, 4 Ann. Cas. 493; Rhode Island Hospital Trust Co. v. Doughton, 270 U. S. 69, 80, 46 S. Ct. 256, 70 L. Ed. 475, 43 A. L. R. 1374.

The decision of this court in the Farmers Loan Company Case was foreshadowed by its decision in Safe Deposit & T. Co. v. Virginia, 280 U. S. 83, 50 S. Ct. 59, 74 L. Ed. 180, 67 A. L. R. 386. There it was held that intangibles, such as stocks and bonds, in the hands of the legal holder of the title in the state of his residence, may not be taxed at the domicile of the equitable owner in another state; and, in respect of taxation of the same securities by two states, we said (page 94 of 280 U. S., 50 S. Ct. 59, 61): 'It would be unfortunate, perhaps amazing, if a legal fiction originally invented to prevent personalty from escaping just taxation should compel us to accept the irrational view that the same securities were within two states at the same instant and because of this to uphold a double and oppressive assessment.'

A little later at the same term, the Farmers Loan Company Case was decided. 280 U. S. 204, 50 S. Ct. 98, 74 L. Ed. 371, 65 A. L. R. 1000. The facts are recited at page 208 of 280 U. S., 50 S. Ct. 98, 99. Henry R. Taylor, domiciled in New York, died testate leaving negotiable bonds and certificates of indebtedness issued by the state of Minnesota and two of her municipalities. Some of them were regis tered; none were connected with business carried on by or for the decedent in Minnesota. His will was probated and his estate administered in New York, and a tax exacted by that state on the testamentary transfer. Minnesota assessed an inheritance tax upon the same transfer, which was upheld by her Supreme Court. This court, applying the maxim mobilia sequuntur personam, held that the situs for taxation was in New York, and that the tax was there properly imposed. The contention on behalf of the state was that the obligations were debts of Minnesota and her municipal corporations, subject to her control; that her laws gave them validity, protected them, and provided means for enforcing payment; and that, accordingly, they had a situs for taxation also in that state.

This court agreed that Blackstone v Miller, and certain approving opinions lent support to the view that ordinarily choses in action might be subjected to taxation both at the domicile of the debtor and that of the creditor, and that two states might tax on different and more or less inconsistent principles the same testamentary transfer of such property without conflict with the Fourteenth Amendment. But it was said that the tendency of that view was to disturb good relations among the states; that the practical effect of it had been bad; and that a preponderance of the states had endeavored to avoid the evil by resort to reciprocal exemption laws. Upon these and other considerations, which we shall not stop to particularize, the case was overruled as no longer constituting a correct exposition of existing law. The view that two states have power to tax the same transfer on different and...

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