Hoyt v. Keegan

• Citation: 167 N.W. 521,183 Iowa 592
• Decision Date: 13 May 1918
• Docket Number: No. 32024.,32024.
• Parties: HOYT v. KEEGAN.
• Court: United States State Supreme Court of Iowa

183 Iowa 592

167 N.W. 521

HOYT

v.KEEGAN.

No. 32024.

Supreme Court of Iowa.

May 13, 1918.

Appeal from District Court, Clinton County; A. P. Barker, Judge.

Application for an order in probate. The question involved was whether certain property of the estate was subject to a collateral inheritance tax. The trial court held adversely to the claim of the Treasurer of State for an assessment of such tax, and he has appealed. Reversed and remanded.H. M. Havner, Atty. Gen., J. W. Kindig, Asst. Atty. Gen., and George Claussen, of Clinton, for appellant.

Wolfe & Wolfe, of Clinton, for appellee.

EVANS, J.

Henry Breen was at the time of his decease an actual resident of Illinois. He died there on July 23, 1915, intestate. He left surviving him neither wife nor child nor parent. His estate therefore passed wholly to collateral heirs. The principal administration upon his estate was had in the state of Illinois. At the time of his death and for some time prior thereto he held a certificate of deposit in the usual form of one of the banks of Clinton, Iowa, for $1,518. He also had on deposit in a savings bank at Clinton, Iowa, the sum of $6,207, which was evidenced by a savings bank passbook. This passbook and the certificate were at all times kept by the deceased in his lifetime in his actual possession in Illinois. Because of these deposits ancillary administration was had in the probate court of Clinton county, Iowa. An administrator was appointed by such court, who collected the funds in question, and reported the same, and applied for an order authorizing him to pay the same to the Illinois administrator. In resistance to such application the treasurer of state appeared and claimed the statutory tax upon collateral inheritances to the extent of 5 per cent. of the fund thus collected by the ancillary administrator. The question therefore is whether these funds came within the jurisdiction of the courts of this state within the meaning of section 1481a, and became thereby subject to such tax, notwithstanding that the deceased was an actual resident of Illinois. The certificate of deposit is not set out in the record, but it seems to be conceded that it was in form a negotiable instrument. The passbook was not a negotiable instrument. In determining the actual situs of choses in action as personal property some authorities distinguish between negotiable paper and the nonnegotiable evidences of indebtedness. We shall therefore consider the two items involved herein separately, and will take up first the item evidenced by the passbook.

I. We have to do with section 1481a, Code Supplement 1913. This section purports to subject to the collateral inheritance tax the--

“estates of all deceased persons, whether they be inhabitants of this state or not, and whether such estate consists of real, personal or mixed property, tangible or intangible, and any interest in, or income from any such estate or property, which property is, at the death of the decedent owner, within this state or is subject to, or thereafter, for the purpose of distribution is brought within this state and becomes subject to the jurisdiction of the courts of this state. * * *”

This statute appears to be identical with a corresponding statute of the state of New York, and is said to have been borrowed therefrom. In re Adams Estate, 167 Iowa, 382, 149 N. W. 531, L. R. A. 1915C, 95. It has been held repeatedly in the state of New York that bank deposits of nonresidents in the taxing state come within the operation of this statute. In re Romaine, 127 N. Y. 80, 27 N. E. 759, 12 L. R. A. 401;In re Whiting, 150 N. Y. 27, 44 N. E. 715, 34 L. R. A. 232, 55 Am. St. Rep. 640;In re Houdayer, 150 N. Y. 37, 44 N. E. 718, 34 L. R. A. 235, 55 Am. St. Rep. 642. The Supreme Court of the United States has held to the same effect. Blackstone v. Miller, 188 U. S. 189, 23 Sup. Ct. 277, 47 L. Ed. 439. The same holding has been announced by the courts of Illinois, Massachusetts, Maryland, and Minnesota. People v. Griffith, 245 Ill. 532, 92 N. E. 313;Kennedy v. Hodges, 215 Mass. 112, 102 N. E. 432;State v. Dalrymple, 70 Md. 294, 17 Atl. 82, 3 L. R. A. 372;State v. Probate Court, 128 Minn. 371, 150 N. W. 1094, L. R. A. 1916A, 901. The general ground of the holding may be indicated by a few excerpts from the cases.

Blackstone v. Miller, 188 U. S. 189, 23 Sup. Ct. 277, 47 L. Ed. 439:

“The question then is narrowed to whether a distinction is to be taken between tangible chattels and the deposit in this case. There is no doubt that courts in New York and elsewhere have been loath to recognize a distinction for taxing purposes between what commonly is called ‘money in the bank and actual coin in the pocket.’ The practical similarity more or less has obliterated the legal difference. [Citing authorities.] In view of these cases, and the decision in the present case, which followed them, a not very successful attempt was made to show that by reason of the facts that we have mentioned, and others, the deposit here was unlike an ordinary deposit in a bank. We shall not stop to discuss this aspect of the case, because we prefer to decide it upon a broader view.

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 authorities.]

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 debts 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. * * * So again, what enables any other than the very creditor * * * to collect the debt? The law of the same place. * * *

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 citizen 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 the state conflict with a fiction due to historic tradition, the fiction must give way.”

Estate of Houdayer, 150 N. Y. 37, 44 N. E. 718, 34 L. R. A. 235, 55 Am. St. Rep. 642:

“The decedent brought his money into this state, deposited it in a bank here, and left it here until it should suit his convenience to come back and get it. * * * If he had deposited in specie, to be returned in specie, there can be no doubt that the money would be property in this state subject to taxation. But, instead, he did as business men generally do, deposited his money in the usual way, knowing that, not the same, but the equivalent, would be returned to him upon demand. While the relation of debtor and creditor technically existed, practically he had his money in the bank, and could come and get it when he wanted it. It was an investment in this state, subject to attachment by creditors. If not voluntarily repaid, he could compel payment through the courts of this state. The depository was a resident corporation, and the receiving and retaining of the money were corporate acts within this state. Its repayment would be a corporate act within this state. Every right springing from the deposit was created by the laws of this state. Every act out of which those rights arose was done in this state. In order to enforce those rights, it was necessary for him to come into this state. Conceding that the deposit was a debt, conceding that it was intangible, still it was property in this state for all practical purposes, and in every reasonable sense within the meaning of the transfer tax act.”

The foregoing is quite in harmony with the utterances of this court in Hunt v. Hopley, 120 Iowa, 695, 95 N. W. 205, and Heinz v. Board, 121 Iowa, 445, 96 N. W. 967, upon an analogous question. It is urged that such a rule results in double taxation. This is doubtless true in a very practical sense. And yet it has uniformly been held that it is not double taxation in a constitutional sense. In re Hartman, 70 N. J. Eq. 664, 62 Atl. 560;Hopkins' Appeal, 77 Conn. 644, 60 Atl. 657;In re Daly, 182 N. Y....