Morrow v. Adams' Estate (In re Adams' Estate)

• Decision Date: 24 November 1914
• Docket Number: No. 27855.,27855.
• Citation: Morrow v. Adams' Estate (In re Adams' Estate), 167 Iowa 382, 149 N.W. 531 (Iowa 1914)
• Parties: IN RE ADAMS' ESTATE. MORROW, TREASURER, v. ADAMS' ESTATE.
• Court: Iowa Supreme Court

167 Iowa 382

149 N.W. 531

IN RE ADAMS' ESTATE.MORROW, TREASURER,

v.ADAMS' ESTATE.

No. 27855.

Supreme Court of Iowa.

Nov. 24, 1914.

Appeal from District Court, Allamakee County; L. E. Fellows, Judge.

Appeal from an order of the district court imposing a collateral inheritance tax upon a part of the estate of Hannah H. Adams, deceased.Affirmed.

Weaver, Evans, and Gaynor, JJ., dissenting.M. B. Hendrick, D. J. Murphy, and H. H. Stilwell, all of Waukon, for appellant.

George Cosson, Atty. Gen., N. J. Lee, of Esterville, and H. E. Taylor, Sp. Counsel, of Waukon, for appellee.

DEEMER, J.

Hannah H. Adams died in the city of Chicago on August 6, 1904, without direct issue.She left a will whereby she disposed of her entire estate to collateral heirs.At the time of her death, and for many years prior thereto, she had been a resident of the state of Florida.Her will was probated in Orange county in said state, and M. B. Hendrick and J. N. Eddy, both residents of Allamakee county, this state, were appointed executors of the will, and as such they duly qualified and administered upon the estate, making distribution thereof among the several legatees and devisees.On November 1, 1909, the county attorney of Allamakee county made application to the probate court therein for the appointment of an executor or administrator in this state, and on the 9th day of that month what are called auxiliary (ancillary) letters of administration were issued to one J. M. Collins, commanding him to, among other things, take possession of all money and estate of Hannah H. Adams, deceased.On December 2, 1909, the county attorney filed in said estate an application for the taxing of a collateral inheritance tax upon certain notes and mortgages held by deceased at the time of her death.This was answered by Hendrick, executor, his coexecutor at the time being dead, and by certain legatees and devisees under the will of Hannah H. Adams.In this resistance they pleaded that deceased was, at the time of her death, a nonresident; that none of the notes and mortgages were held in this state at the time of her death, by agent or otherwise; that they were in fact in possession of decedent outside of this state.On the issues thus joined, the trial court held that certain property described in the application, which consisted of certain notes, the most of which were secured by mortgages upon real estate in this state, was subject to a collateral inheritance tax, and the same were ordered appraised by the collateral inheritance tax appraisers.The respondents to the application appeal.

The property in question consisting of notes, nearly all of which are secured by mortgages upon real estate in this state, passed by the will of testatrix to collateral heirs, and, if it had a situs in this state at the time of testatrix's death, was subject to her collateral inheritance tax, although testatrix was a nonresident at the time of her demise.The record shows that the property in question originally belonged to testatrix's husband, one D. W. Adams, who died a resident of Florida in the year 1897.Adams had for years carried on a loaning business at Waukon, in this state, through M. B. Hendrick, who was afterward appointed one of testatrix's executors.One L. A. Howe, an officer of the Waukon State Bank, also held a power of attorney authorizing him to cancel and release mortgages of record taken in Adams' name, and also a power of attorney for the same purpose from Hannah H. Adams.He acted in conjunction with Hendrick in the matter of making loans of Adams' money.Loans were made from time to time by Hendrick, and checks signed “D. W. Adams, by M. B. Hendrick,” were paid by the bank to the persons borrowing money.The securities taken for the loan were held by the bank until paid, and were then delivered to the makers.Hannah H. Adams acquired title to all her husband's property by will or otherwise, but the loaning business was continued in Allamakee county just as it had been before her husband's death.No application for loans were sent to either Mr. or Mrs. Adams.They were made either to Hendrick or Howe and accepted by them, and checks were issued by Hendrick, as aforesaid, when the loans were made.Payments upon loans were made to the bank, and the money placed to the credit of Adams, to be reloaned as occasion offered.All the notes and mortgages were deposited in the bank and remained there until August 3, 1904, when Hendrick, as is claimed under the direction of Hannah H. Adams, obtained all the notes and mortgages from the bank, giving his receipt therefor, and took them to Chicago, where Mrs. Adams then was; and it is claimed that through her direction he took the said securities to Prairie du Chien, Wis., and there deposited them in a bank, where it is said they remained until after the death of Mrs. Adams.The power of attorney issued to Howe was not revoked, save by the death of Mrs. Adams.The securities remained in the Prairie du Chien bank, where they were left for safe-keeping, until after the death of Mrs. Adams and the appointment of Hendrick as one of the executors of her estate, when they were received by said Hendrick and, as he claims, administered upon by him pursuant to his appointment as executor.

[1] The question is: Are these securities liable to a collateral inheritance tax in this state?The general rule is that personal property follows the person, and that its situs, for the purpose of taxation, is the domicile of the owner.“Mobilia sequunter personam” is the principle usually applied.But it is well settled that the Legislature may give a local situs to personal property quite distinct from that of the owner's domicile.New Orleans v. Stempel, 175 U. S. 309, 20 Sup. Ct. 110, 44 L. Ed. 174;Bristol v. Washington Co., 177 U. S. 133, 20 Sup. Ct. 585, 44 L. Ed. 701;State Assessors v. Comptor, 191 U. S. 388, 24 Sup. Ct. 109, 48 L. Ed. 232;Goldgart v. People, 106 Ill. 25;Hutchinson v. Board, 66 Iowa, 35, 23 N. W. 249;In re Jefferson, 35 Minn. 215, 28 N. W. 256;State v. Ins. Co., 80 Minn. 277, 83 N. W. 339;Finch v. York County, 19 Neb. 50, 26 N. W. 589, 56 Am. Rep. 741;Hubbard v. Brush, 61 Ohio St. 252, 55 N. E. 829;Billinghurst v. Spink Co., 5 S. D. 84, 58 N. W. 272;Buck v. Miller, 147 Ind. 586, 45 N. E. 647, 47 N. E. 8, 37 L. R. A. 384, 62 Am. St. Rep. 436;Parker v. Strauss, 49 La. Ann. 1173, 22 South. 329;Liverpool Co. v. Board, 51 La. Ann. 1028, 25South. 970, 45 L. R. A. 524, 72 Am. St. Rep. 483;People v. Ins. Co., 29 Cal. 534;Buck v. Beach, 164 Ind. 37, 71 N. E. 963, 108 Am. St. Rep. 272.

[2] But it has been doubted if the Legislature has power to fix the situs of securities at the residence of the debtor, if the creditor had a domicile elsewhere, and there is no agency within the state, or the securities are not there present.State Tax on Foreign-Held Bonds, 15 Wall. 300, 21 L. Ed. 179;Detroit v. Lewis, 109 Mich. 155, 66 N. W. 958, 32 L. R. A. 439.But see, contra, In re Whiting, 150 N. Y. 27, 44 N. E. 715, 34 L. R. A. 232, 55 Am. St. Rep. 640.Courts everywhere hold, however, that personal property may have a business situs either at the residence of the debtor or at some other point than that of the domicile of the creditor, and, as to succession taxes, personal property in the form of securities may have a situs either at the domicile of the debtor or at the place of their actual situs.Gallup's Appeal, 76 Conn. 617, 57 Atl. 699;Detroit v. Lewis, 109 Mich. 155, 66 N. W. 958, 32 L. R. A. 439;In re Phipps, 77 Hun, 325, 28 N. Y. Supp. 330, affirmed in143 N. Y. 641, 37 N. E. 823;Lewis' Estate, 203 Pa. 211, 52 Atl. 205.

[3] If the property sought to be charged had a business situs in this state, it was under our statute(Code Suppl.§ 1467) subject to our collateral inheritance tax, that it had such situs down to the time it was taken to Chicago, three days before testatrix's death, is very clear.The loaning business of both D. W. Adams and his wife had been given a local situs in this state, and the securities were kept here down to their removal to Chicago and Prairie du Chien.It is well to state here that Prairie du Chien is just across the Mississippi river from Allamakee county, and is the nearest railway station to Waukon outside of the state.But it is beyond question that the securities were physically at Prairie du Chien in a bank for safe-keeping when testatrix died, and they are not therefore subject to the tax, unless constructively in this state at the place of their business situs or by reason of the fact that they were practically all secured by mortgages upon real estate in this state.We must inquire then, first, how the securities came to be at Prairie du Chien.The record shows the following with reference to this matter; the only testimony being as follows:

“My name is M. B. Hendrick.The securities listed in Exhibit 1 were given to me by the Waukon State Bank on August 3, 1904.Q.How did you come to go to the bank and get these securities?A.I was ordered to do so by Mrs. Adams.Mrs. Adams was in the city of Chicago, state of Illinois, when she directed me to get those securities, and she told me to take them to her where she was in Chicago, and I did so.After taking them to Mrs. Adams, they were deposited in a bank outside of the state of Iowa, and remained there until after the appointment of the executors of her estate; then they were brought here for collection after the appointment of the executors.I was appointed one of the executors in the state of Florida probate court of Orange county on the 15th day of August, 1904.Nearly all of the notes and securities described in Exhibit 1 were collected and distributed under the orders of the probate court of Florida, and those not collected were ordered distributed in pursuance of an order of the Florida probate court by myself and my associate executor.* * * I think my business with Mr. Adams commenced before he left...