In re Estate of Clarkson
| Decision Date | 09 October 1916 |
| Docket Number | 182 |
| Parties | IN RE ESTATE OF R. A. CLARKSON, DECEASED |
| Court | Arkansas Supreme Court |
Appeal from Sebastian Circuit Court; Paul Little, Judge; affirmed.
Judgment affirmed.
Warner & Warner, for appellant.
1. The lower court erred in holding that the shares of stock in the Oklahoma corporation were subject to inheritance tax in Arkansas. These shares are not within the terms and provisions of the Act 1913, p. 826. The intangible property must be within the State and possessed by a citizen of this State or resident thereof. These certificates of shares are in a foreign corporation and are in possession of the administrator in Oklahoma and the tax has been paid on them in that State.
The certificates are mere evidences of ownership of property in Oklahoma. A certificate of stock is different from an ordinary chattel. It is only evidence of ownership of stock held by the Oklahoma corporation for the benefit of the owner and cannot be within the purview of the law of this State. 117 U.S. 1, 44 S. Ed., 647, 651; 25 L. R. A. (N. S.) 384. The stock and corporation are physically outside this State. It is necessary that two things exist in order that the statute may apply. (1) The certificates must be "intangible property," and (2) that the property or stock is "within the State of Arkansas." But the stock is in possession of the Oklahoma administrator and the laws of that State govern.
2. A fictitious situs cannot prevail over the actual situs located by the decedent himself. 150 N.Y. 1. The fiction of "mobilia sequuntur personam" is not applicable. 80 Ark. 138; 23 N.Y. 224, 228; Story Confl. of Laws, § 550; 141 U.S. 18, 22; 51 U.S. L. Ed., 853; 51 Id. 1106.
3. The Oklahoma tax is valid and has been paid. 25 L. R. A. (N. S.) 384; 47 U.S. L. Ed., 439, 444. Statutes imposing this tax are strictly construed against the government and all doubts resolved in favor of the taxpayer. 85 P. 1129; 161 N.Y. 211; 140 Id. 306; 46 U.S. (L. Ed.) 697; 37 Cal. 283. 56 A. 281, is a similar case and reaches the correct conclusion. The reasoning is conclusive. See also 25 So. 229; 87 Am. St 90; 25 S.W. 202; 2 Beach Priv. Corp., § 633.
4. No inheritance tax can be imposed. 5 Pa.St. 144; 81 N.W. 603; 55 N.C. 51; 15 Can. S. C. 469; 97 Pa.St. 179; Ror. Int. St. Law 205. The actual situs of the property and not the domicile of the owner is the criterion. 81 N.W. 603.
G. C and Joe Hardin, for appellee.
1. This is "intangible property" under the Act and clearly subject to the tax. The property was transferred by will. This is not a tax upon property but a tax upon the transfer of property. Acts Ark. No. 197, 1913, § 2; 100 Ark. 175; 120 Ark. 295.
2. The question involved here as to the power of probate courts of the testator's domicile to compute shares of stock owned by the decedent at death in a foreign corporation in arriving at the inheritance tax due is well settled. 83 N.E. 881; 26 A. 728; Id. 27; 28 Id. 137; 38 N.E. 961; 36 Id. 505; 32 Id. 1096; 81 N.W. 603.
3. Any intangible property of a resident of this State, wherever situated is subject to the tax. 32 N.E. 1096; Ib. 1091; 83 Id. 881; 55 Id. 623; 26 A. 728; 49 Pa.St 519; 81 N.W. 603; 25 So. 259; 100 Ark. 175; 179 S.W. 491; Dos Passos on Int. Tax, Ch. 4, § 46; Cent. Dig. 45 Taxation, 1685-1688; Blakemore & Bancroff on Inher. Tax, §§ 192-3, and many others. The Act works no hardships and only fixes a transfer tax on property clearly within the jurisdiction of the State.
R. A. Clarkson was a citizen of Fort Smith at the time of his death, and was then the owner of $ 20,000.00 of the capital stock of an Oklahoma corporation in addition to certain real estate and personal property in this State. All of this property was disposed of by will, but there was an ancillary administration in Oklahoma whereby this corporate stock was administered upon. The inheritance tax upon all the property in this State has been paid and it is now sought to subject this stock to the payment of the tax.
The question at issue is stated in one of the excellent briefs in the case as follows:
"Has the probate court in Arkansas authority to consider said shares of stock in a foreign corporation as property of the estate in computing the inheritance tax upon said estate and to tax the transfer of same when made by the will of a resident testator?"
The court below held the property subject to the tax, and the representatives of the estate have duly prosecuted this appeal.
The proceeding is had under Act 197 of the Acts of 1913, page 826, and so much of the Act as is relevant here reads as follows:
Subdivision 2 of Section 1 of the Act defines tangible property as follows:
"The words 'tangible property' as used in this Act shall be taken to mean corporeal property, such as real estate and goods, wares and merchandise, and shall not be taken to mean money, deposits in banks, shares of stock, bonds, notes, credits or evidences of an interest in property or evidences of debt."
Subdivision 3 of the same Section defines intangible property as follows:
"The words 'intangible property' as used in this Act shall be taken to mean incorporeal property, including money, deposits in bank, shares of stock, bonds, notes, credits, evidences of an interest in property and evidences of debt."
And Subdivision 4 of the same Section defines the meaning of the word transfer as there employed as follows:
"The word 'transfer' as used in this Act shall be taken to include the passing of property or any interest therein in possession or enjoyment, present or future, by inheritance, descent, devise, bequest, grant, deed, bargain, sale or gift in the manner herein prescribed."
It is insisted by appellants in opposition to the judgment of the court below that the certificates of stock were not "intangible property within the State of Arkansas" unless the maxim "mobilia sequunter personam" is applied, and it is urged that this maxim should not be applied here because it is conceded that these shares are subject to the succession or transfer tax imposed by the State of Oklahoma, and that the Oklahoma tax has been assessed and paid. It is said, therefore, that because Oklahoma can impose, and has imposed, this tax, it is wholly inconsistent for this State to do the same thing, and that the inheritance tax can only be imposed by a State upon the personal property of a domiciled decedent which is actually in the State at the time of his death, or which may subsequently be brought into it for the purposes of administration, and that no inheritance tax can be levied upon the personal property of a domiciled decedent which at the time of his death is located beyond the domain of the State and which is never brought within. the State of his domicile for administration. It is pointed out that this inheritance or succession tax is a special and not a general tax and that the statute is therefore to be strictly construed in favor of the taxpayer and against the government. That such statutes are to be so construed was recognized by us in the case of State v. Handlin, 100 Ark. 175, 139 S.W. 1112, and McDaniel v. Byrkett, 120 Ark. 295, 179 S.W. 491.
It is therefore, necessary that the authority for the imposition of this tax affirmatively appear in the Act providing for its collection. We think this authority does appear. It will be seen from the part of Section 2 quoted above that the tax is imposed only upon the tangible property which is situated within the State, while all intangible property of residents of the State, wherever situated, is subject to the tax; and Subdivisions 2 and 3 of Section 1 quoted above define both tangible and intangible property, and "shares of stock" are expressly included in the definition of intangible property. It appears, therefore, that the State has undertaken to make these shares of stock taxable and has in...
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