James Buck v. William Beach

Decision Date27 May 1907
Docket NumberNo. 14,14
Citation27 S.Ct. 712,206 U.S. 392,51 L.Ed. 1106,11 Ann. Cas. 732
PartiesJAMES BUCK, Trustee under the Will of Job M. Nash, Deceased, Plff. in Err., v. WILLIAM E. BEACH, Treasurer of Tippecanoe County, Indiana
CourtU.S. Supreme Court

Judgment against the plaintiff in error (who was defendant below) was recovered in a state circuit court in Indiana, which was affirmed by the supreme court of the state (164 Ind. 37, 108 Am. St. Rep. 272, 71 N. E. 963), and the plaintiff in error brings the case here to review that judgment. The predecessor of the defendant in error, being at the time treasurer of Tippecanoe county, in the state of Indiana, brought this action in 1897 against the plaintiff in error to subject funds in his hands to the payment of taxes alleged to be due from the estate of one Job M. Nash, deceased, which taxes had been assessed in above county and state in 1894, after the death of Nash, on personal property of the deceased that had been omitted from the tax list in his lifetime, during the years 1881 to 1893, both inclusive.

The point in dispute between the parties relates to the assessment for omitted property on what are called the'O hio notes,' the plaintiff in error insisting that such assessment was illegal as beyond the jurisdiction of the state to impose.

The material facts are not really in dispute. It appears that Nash died in 1893, at that time, and for more than twenty years prior thereto, a resident of the city and state of New York. He left a will which was admitted to probate in Hamilton county, Ohio, and his executors qualified there. They thereafter refused to pay the tax imposed upon the Ohio notes in Indiana. By the terms of the will a trust was created, and part of the personal property constituting such trust (more than enough to pay the taxes in dispute) was turned over to James Buck, plaintiff in error and one of the two trustees named in the will. He resided in Lafayette, in the state of Indiana, and the other trustee resided in Cincinnati, in the state of Ohio. From this fund, in the hands of Buck, the defendant in error asked to have the taxes paid which had been assessed, as above stated, and which he claimed were due the state. This was refused, and this action was thereupon commenced.

A former action had been brought by the trustees for relief by injunction against the predecessor of the defendant in error to enjoin him from seizing upon or interfering with the trust fund for the payment of the taxes in dispute, and in that action the trustees had been unsuccessful. Buck v. Miller, 147 Ind. 586, 37 L.R.A. 384, 62 Am. St. Rep. 436, 45 N. E. 647, 47 N. E. 8, decided in 1896.

The amount assessed on the estate of decedent upon the 'Ohio notes' from 1884 to 1893, on account of omitted assessments during those years, aside from the penalties for nonpayment, was $36,357.71.

During the above-mentioned years, while the decedent was, as stated, a resident of the state of New York, he had a large sum of money invested in the states of Ohio and Indiana, approximating $750,000. The money loaned by him in Ohio was evidenced by Ohio notes, made by the borrowers, who were residents of Ohio, the payment of the money borrowed being secured by mortgages on lands situated in Ohio. The moneys loaned in Ohio were loaned through an agent of Mr. Nash, residing in Cincinnati. The notes were dated and payable in Cincinnati, to the order of Mr. Nash, but were not indorsed by him, and all renewals and payments on account of them were made to his agent in Cincinnati. All moneys paid upon or by reason of these notes were deposited in a bank in Cincinnati to the credit of Mr. Nash, and no part thereof was sent to Indiana. The Cincinnati agent commenced loaning decedent's money about 1860, and, upon the removal of decedent to New York in 1870, and until his death, in 1893, the agent made investments on decedent's behalf in Ohio, collected the principal and interest upon his mortgage loans, and had general charge of his financial interests in that state.

James Buck was the agent of decedent at Lafayette, in the state of Indiana, for many years preceding the death of Mr. Nash. The Ohio notes were sent to him from Cincinnati by the agent there, during the years in question, together with the mortgages securing the payment of the notes, and they were kept in a safe at Lafayette, Indiana, by Mr. Buck, but no business was transacted in regard to them nor any use made of them in Indiana, otherwise than that a short time before the interest on or principal of the notes became due they were sent to the Ohio agent to have the interest payments made to him indorsed upon them, or to be delivered up if the principal were paid.

Nothing else was done in Indiana in regard to the notes, except that a few days prior to the 1st day of April in each year (which is the day upon which assessments for taxes are, by law, made in the state of Indiana) Mr. Buck sent the notes and mortgages to the Ohio agent, and a few days subsequent to that day in each year the same were returned by the Ohio agent to Mr. Buck, who retained them in his possession.

When the Ohio notes and mortgages were sent from Cincin- nati to Mr. Buck by the Ohio agent, Mr. Buck made a record of their receipt in a book kept by him for that purpose, showing the dates and amounts of the notes and when due, and whenever payment or renewal of said notes was reported by the Ohio agent to the Indiana agent, he made entries of the facts in the register kept by him.

Mr. Buck also had possession of the notes and mortgages given to Mr. Nash for moneys loaned in the state of Indiana, and such moneys were invested and reinvested in that state during these years, and the taxes thereon were duly paid.

Mr. Buck transacted no business directly with the makers of the Ohio notes or mortgages, but, as stated, sent the notes to the Ohio agent for any business to be done in regard to them.

During Mr. Buck's agency money was sometimes sent to him at Lafayette from Cincinnati to be invested, which money was placed on deposit in the bank in Indiana and loaned for Mr. Nash. Such moneys have nothing to do with the 'Ohio notes' in issue in this action.

During these years, at least from 1886, Mr. Buck was authorized by virtue of a power of attorney from Mr. Nash to satisfy when due and when the money was paid all notes and mortgages; but, so far as the Ohio notes and mortgages were concerned, he never assumed to satisfy any of them or receive payment for the same. That was all done by the Ohio agent at Cincinnati.

Messrs. Byron W. Langdon and W. H. H. Miller for plaintiff in error.

[Argument of Counsel from pages 395-397 intentionally omitted] Messrs. Will R. Wood, Cassius C. Hadley, and J. Frank Hanly for defendant in error.

[Argument of Counsel from pages 397-399 intentionally omitted] Mr. Justice Peckham, after making the foregoing statement, delivered the opinion of the court:

The only question involved here is in regard to the taxability of the Ohio notes in the state of Indiana.

The plaintiff in error asserts that the simple physical presence of the Ohio notes in Indiana, payable to, and not indorsed by, the decedent, did not constitute taxable property there, because such notes were given and were payable and were paid in Ohio, by residents of Ohio, and to a nonresident of Indiana, and for loans made in Ohio, the capital represented by such notes never having been used in business in Indiana, and he insists that a tax upon such capital or upon the notes themselves as representing that capital, is an illegal tax, and that to take property in payment of such an illegal tax is to take it without due process of law, and constitutes a violation of the 14th Amendment.

If the facts in this case constituted the debts evidenced by the Ohio notes property in the jurisdiction of the state of Indiana at the time when such taxes were imposed, then the tax was valid, if there were statutory authority of that state for the same. The state court has held that there was such authority (Buck v. Miller, 147 Ind. 586, 37 L.R.A. 384, 62 Am. St. Rep. 436, 45 N. E. 647, 47 N. E. 8; Buck v. Beach, 164 Ind. 37, 108 Am. St. Rep. 272, 71 N. E. 963, being the case at bar), and that construction of the statute concludes this court (Delaware L. & W. R. Co. v. Pennsylvania, 198 U. S. 341, 352, 49 L. ed. 1077, 1081, 25 Sup. Ct. Rep. 669).

The sole question, then, for this court, is whether the mere presence of the notes in Indiana constituted the debts of which the notes were the written evidence property within the jurisdiction of that state, so that such debts could be therein taxed.

Generally, property, in order to be the subject of taxation, must be within the jurisdiction of the power assuming to tax. State Tax on Foreign-held Bonds, 15 Wall. 300, 21 L. ed. 179; New York, L. E. & W. R. Co. v. Pennsylvania, 153 U. S. 628, 646, 38 L. ed. 846, 852, 14 Sup. Ct. Rep. 952; Savings & L. Soc. v. Multnomah County, 169 U. S. 421, 427, 42 L. ed. 803, 805, 18 Sup. Ct. Rep. 392; Louisville & J. Ferry Co. v. Kentucky, 188 U. S. 385, 47 L. ed. 513, 23 Sup. Ct. Rep. 463; Delaware, L. & W. R. Co. v. Pennsylvania, 198 U. S. 342, 49 L. ed. 1077, 25 Sup. Ct. Rep. 669; Union Refrigerator Transit Co. v. Kentucky, 199 U. S. 194, 50 L. ed. 150, 26 Sup. Ct. Rep. 36; Metropolitan L. Ins. Co. v. New Orleans, 205 U. S. 395, 51 L. ed. 853, 27 Sup. Ct. Rep. 499.

In regard to tangible property the old rule was mobiliasequunturpersonam, by which personal property was supposed to follow the person of its owner, and to be subject to the law of the owner's domicil. For the purpose of taxation however, it has long been held that personal property may be separated from its owner, and he may be taxed on its account at the place where the property is, although it is not the place of his own domicil, and even if he is not a citizen or resident of the state which imposes the tax. Pullman's Palace Car Co. v....

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