Newell v. Tremont Lumber Co.

• Decision Date: 03 May 1926
• Docket Number: 27664
• Citation: 161 La. 649,109 So. 344
• Court: Louisiana Supreme Court
• Parties: NEWELL v. TREMONT LUMBER CO. et al

109 So. 344

161 La. 649

NEWELL v. TREMONT LUMBER CO. et al

No. 27664

Supreme Court of Louisiana

May 3, 1926

Rehearing Denied June 28, 1926

Appeal from Ninth Judicial District Court, Parish of Rapides; R. C Culpepper, Judge.

Action by Mrs. Maxwell B. Newell against the Tremont Lumber Company and others. Judgment for defendants, and plaintiff appeals.

Reversed, with directions.

Theus Grisham & Davis, of Monroe, White, Holloman & White, of Alexandria, and Denegre, Leovy & Chaffe, of New Orleans, for appellant.

R. B. Williams and Peterman, Dear & Peterman, all of Alexandria, for appellee Tax Collector.

OPINION

ST. PAUL, J.

Plaintiff is universal legatee and sole heir of her mother, and seeks herein (contradictorily with the inheritance tax collector) to compel the defendant company to transfer into her name certain shares of its capital stock standing upon the books of the company in the name of her mother, without (previous) payment of an inheritance tax under Act 127 of 1921, p. 323 (Ex. Sess.).

I.

Plaintiff is domiciled and resides out of the state. Her mother was domiciled, resided, and died in Cook county, state of Illinois, and at the time of her death (and previously) the certificates of stock were held by her at her said domicile, and were not (and had never been) within the territorial limits of this state.

On the other hand, defendant corporation is organized under the laws of this state, and has its domicile therein, where all of its physical property is situated.

II.

Act 267 of 1914, p. 521, the general corporation law of the state, provides (section 8, p. 526) that the stock of all corporations organized thereunder (or otherwise, see section 32, p. 537), "shall be represented by certificates and shall be personal property, * * * transferable as prescribed by law."

And the Inheritance Tax Law aforesaid provides (section 2, p. 324) that "said tax shall be imposed with respect to all property * * * embraced in any inheritance, * * * including all personal property physically in the state, * * * whether owned or inherited by * * * a resident or nonresident, and whether inherited * * * under the law of this state or of any other state * * * [and all personal property owned by residents of the state, * * * wherever situated * * *]."

III.

Manifestly, therefore, the shares of stock inherited by plaintiff (a nonresident) from her mother (also a nonresident) under the laws of another state cannot, under the very terms of the statute, ut supra, be subjected to an inheritance tax, unless the same be held to have been physically within the state at the time the inheritance accrued. And we are therefore not required to pass upon the right of the state to collect a tax upon tangible personal property, not physically within its limits, inherited by a nonresident from another nonresident, for the state has not attempted to do so. See Frick v. Pennsylvania, 268 U.S. 473, 45 S.Ct. 603, 69 L.Ed. 1058. See also, Rhode Island Hospital Trust Co. v. Doughton, 270 U.S. 69, 46 S.Ct. 256, 70 L.Ed. 475.

IV.

Hence the sole question presented is whether the shares of stock aforesaid were physically within the state at the time plaintiff inherited them from her mother. And the answer to that question is they were not.

V.

In Direction Der Disconto Gesellschaft v. U.S. Steel Corporation, 267 U.S. 22, 45 S.Ct. 207, 69 L.Ed. 495, it was held, in effect, that the physical situs of shares of stock in a corporation was where the certificates of stock were located, for it was there held that shares of stock in an American corporation belonging to bankers in Germany could be validly captured, confiscated, and sold by Great Britain by mere seizure of the certificates of stock found in their London branch. And for reason why Great Britain had jurisdiction over shares of stock in an American corporation belonging to bankers in Germany, the court said that the certificates "so far...