Hopper v. Edwards

• Decision Date: 18 February 1916
• Citation: 88 N.J.Law 471,96 A. 667
• Parties: HOPPER v. EDWARDS, Comptroller of Treasury.
• Court: New Jersey Supreme Court

96 A. 667

88 N.J.Law 471

HOPPER

v. EDWARDS, Comptroller of Treasury.

Supreme Court of New Jersey.

Feb. 18, 1916.

(Syllabus by the Court.)

Certiorari by Irving Hopper, executor of Nichols B. Cushing, deceased, against Edward I. Edwards, Comptroller of the Treasury of the State of New Jersey, to review assessments levied under the Transfer-Inheritance Tax Act. Assessments affirmed.

Argued November term, 1915, before GARRISON, TRENCHARD, and BLACK, JJ.

Vredenburgh, Wall & Carey, of Jersey City, for prosecutor. John W. Wescott, Atty. Gen., and Herbert Boggs, Asst. Atty. Gen., for defendant.

TRENCHARD, J. This writ of certiorari brings up for review an assessment levied by the comptroller under and by virtue of the Transfer-Inheritance Tax Act of 1909 (P. L. 1909, c. 228, p. 325). It appears that the decedent, Nichols B. Cushing, died about November 26, 1913, at Upper Nyack, N. Y., where he had resided for 10 years next preceding his death; that his legal domicile had been in the state of New York for 18 years next preceding his death; that he possessed, inter alia, bonds, secured by mortgages on real estate, amounting to the sum of $329,674.80, which bonds and mortgages, at the time of his death, were in a safe in a building known as the "Cushing Building," located in the city of Jersey City, in the state of New Jersey; that part of such mortgages were upon real estate located in the state of New Jersey, and part upon real estate located in the state of New York; that the mortgages upon real estate in New Jersey amounted to the sum of $74,514.20, and the mortgages upon real estate in New York amounted to the sum of $255,160.60. It also appears that collateral inheritance tax has been assessed by the state of New York upon these same bonds and mortgages, and that it has been paid. The comptroller, in assessing the property of the decedent, subject to taxation under our Transfer-Inheritance Tax Act of 1909 (P. L. p. 325), included all of such bonds and mortgages as "personal property within the state of New Jersey." The question presented is whether or not this assessment was lawful, and that in turn presents the question whether or not these bonds and mortgages, so actually within the state of New Jersey at the time of decedent's death, were property within this state within the meaning of paragraph 2 of section 1 of the Transfer-Inheritance Tax Act of 1909.

We are of the opinion that these questions must be decided in the affirmative.

Section 1 of the act, so far as relevant to this case, is as follows:

"Sec. 1. A tax shall be and is hereby imposed upon the transfer of any property, real or personal, of the value of five hundred dollars or over, or of any interest therein or income therefrom, in trust or otherwise, to persons or corporations, in the following cases: First. When the transfer is by will or by the intestate laws of this state from any person dying seised or possessed of the property while a resident of the state. Second. When the transfer is by will or intestate law, of property within the state, and the decedent was a nonresident of the state at the time of his death."

The Legislature has the power to thus impose a tax upon the transfer, by will or intestate law, of property within the state, when the decedent is a nonresident of the state at the time of his death.

The power of the state to impose a succession tax upon personal property actually present in this state at the time of a nonresident decedent's death was, in principle, affirmed in Blackstone v. Miller, 188 U. S. 189, 23 Sup. Ct. 277, 47 L. Ed. 439. That case came before the Supreme Court of the United States on error from the Surrogate's Court of New York County. It brought up a decree of that court, sustained by the Appellate Division of the Supreme Court (69 App. Div. 127, 74 N. Y. Supp. SOS), and by the Court of Appeals (171 N. Y. 682, 64 N. E. 1118), levying a tax on the transfer by will of certain property of Timothy B. Blackstone, the testator, who died domiciled in Illinois. The decedent, at the time of his death, had on deposit in the United States Trust Company of New York $4,843,456.72. It was subject to draft on five days' notice. The transfer tax was imposed upon this deposit under the New York statute of 1892 (Laws 1892, c. 399), the first section of which provides as follows:

"A tax shall be and is hereby imposed upon the transfer of any property, real or personal, of the value of five hundred dollars or over, or of any interest therein or income therefrom, in trust or otherwise, to persons or corporations not exempt by law from taxation on real or personal property in the following cases: (1) When the transfer is by will or by the intestate laws of this state, from any person dying seised or possessed of the property while a resident of the state. (2) When the transfer is by will or intestate law, of property within the state, and the decedent was a nonresident of the state at the time of his death."

The Supreme Court of the United States, construing this statute, held that the imposition of such a tax upon this deposit was within the power of the Legislature. And our Court of Errors and Appeals has said, in effect, that the state has power to impose a succession tax upon property within this state, without regard to the domicile of the decedent. Neilson v. Russell, 76 N. J. Law, 655, 71 Atl. 286, 19 L. B. A. (N. S.) 887, 131 Am. St. Rep. 673; Dixon v. Russell, 79 N. J. Law, 490, 76 Atl. 982.

It is to be noticed that the only difference between the New York act of 1892, and the act of 1909 of this state, is the omission, in the New Jersey statute, of the words "not exempt by law from taxation on real or personal property."

We think that the bonds, and mortgages securing them upon real estate located in New Jersey, which bonds and mortgages were actually physically present in New Jersey at the time of the owner's death, were property within the state of New Jersey within the meaning of paragraph 2 of section 1 of the act of 1909, and so were properly taxed by the Comptroller; even though they had been taxed under a like statute in New York where the owner resided at the time of his death. This was decided, in effect, by Blackstone v. Miller, supra, and by the same case in the New York Court of Appeals (171 N. Y. 682, 64 N. E. 1118). Says Mr. Justice Holmes, in the case in the United States Supreme Court (188 U. S. at page 204, 23 Sup. Ct. at page 278 ):

"To come closer to the point, no one doubts that succession to a tangible chattel may be taxed wherever the property is found, and none the less that the law of the situs accepts its rules of succession from the law of the domicile, or that by the law of the domicile the chattel is part of a universitas and is taken into account again in the succession tax there"—citing cases.

He further says:

"No doubt this power on the part of two states to tax on different and more or less inconsistent principles leads to some hardship. It may be regretted, also, that one and the same state should be seen taxing, on the one hand according to the fact of power, and, on the other, at the same time, according to the fiction that, in successions after death, mobilia sequuntur personam and domicile governs the whole. But these inconsistencies infringe no rule of constitutional law."

The principle of the decision in Blackstone v. Miller is that the deposit in question in the bank in the state of New York was property within the state, and subject to the transfer tax laws of the state, because the transfer of the deposit necessarily depended upon and involved the law of New York for its execution; or, in other words, that the transfer was subject to the power of the state of New York. The court says (188 U. S. 205, 23 Sup. Ct 278, 47 L. Ed. 439):

"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"—citing cases. "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. * * * What gives the debt validity? Nothing but the fact that the law of the place where the debtor is will make him pay. It does not matter that the law would not need to be invoked in the particular case. * * * Power over the person of the debtor confers jurisdiction, we repeat. And this being so, we perceive no better reason for denying the right of New York to impose a succession tax on debts owed by its citizens than upon tangible chattels found within the state at the time of the death. The maxim mobilia sequuntur personam has no more truth in the one case than in the other. When logic and the policy of a state conflict with a fiction due to historical tradition, the fiction must give way."

We have quoted at this length from Justice Holmes' opinion because of its cogent and exact reasoning, and because the language applies so exactly to the mortgages on real estate located in this state. It must be assumed, as to these bonds and mortgages, that the debtors reside within this state, and are subject to the jurisdiction thereof. This state has power over the person of the debtor and jurisdiction over the real estate, the security for the payment of the debt. It is the law of this state which gives these debts validity, and the law of this state which forces the debtor to pay. The right of the creditor (the decedent or his executor) to collect the debt depends upon the law of this state. Also, we think that the bonds, and mortgages upon real estate located in the state of New York, and which bonds and mortgages were actually physically present within the state of New Jersey at the time of the owner's death, are property within the state...