People v. Union Trust Co.

• Decision Date: 03 October 1912
• Citation: 99 N.E. 377,255 Ill. 168
• Parties: PEOPLE v. UNION TRUST CO. et al.
• Court: Illinois Supreme Court

255 Ill. 168

99 N.E. 377

PEOPLE

v.UNION TRUST CO. et al.

Supreme Court of Illinois.

June 21, 1912.

Rehearing Denied Oct. 3, 1912.

Appeal from Cook County Court; John E. Owens, Judge.

Proceedings by the People against the Union Trust Company, as administrator of the estate of James C. King and others, to collect inheritance taxes. From a judgment of the county court affirming an appraisement of the tax, defendants appeal. Reversed and remanded.Kraus, Alschuler & Holden, of Chicago (Charles R. Holden, William S. Miller, and Americus B. Melville, all of Chicago, of counsel), for appellants.

W. H. Stead, Atty. Gen. (Walter K. Lincoln, of Chicago, of counsel), for the People.

CARTER, J.

November 1, 1905, James C. King died testate, domiciled at Chicago, Ill. leaving him surviving a widow, Maud A. Robinson King, but no child, children, or descendants thereof. On July 10, 1901, an antenuptial agreement was executed between said James C. King and Maud A. Robinson, then a spinster, by which she agreed to receive from his estate $100,000 in lieu of all her future rights under the law as his wife or widow. By his will, executed on July 6, 1901, after giving a number of legacies to nephews, nieces, and other persons, and a legacy of $10,000 to Maud A. Robinson, whom he afterwards married, he left the remainder of his estate to a trustee to organize and maintain a charitable institution to be called ‘The James C. King Home for Old Mem.’ He executed a codicil to his will July 13, 1901, in which he referred to the antenuptial agreement, and republished and confirmed the will with all of its terms, conditions, and legacies, and stated that the antenuptial agreement was in lieu of a settlement for all of his wife's interest in his estate. The will and codicil were admitted to probate December 19, 1905, in the propate court of Cook county. December 23d of that year the widow executed an instrument repudiating the antenuptial agreement and renouncing the will. In February, 1906, the widow and the residuary legatee, the James C. King Home for Old Men, through its trustee, the Northern Trust Company, entered into an agreement whereby the widow was to retain as her share of the estate $600,000 in money and securities and an income for her life from a fund of $400,000. A bill was filed in the circuit court of Cook county with the necessary parties and a decree entered confirming this compromise settlement. March 25, 1907, the widow withdrew her renunciation of the will.

James C. King died seised of certain property, consisting of stocks and bonds of non-Illinois corporations, which were at that time lying in a safety deposit box in Los Angeles, Cal., amounting in value to something over $600,000. He also had a bank deposit of $16,140 in Los Angeles. His entire estate, real and personal, including the personal property in California, amounted approximately to $4,100,000. In February, 1906, an administrator with the will annexed was appointed by the superior court of Los Angeles county, Cal., who took possession of the personal property in that state left by the decedent. He published a notice to creditors and filed an inventory. No claims were presented against the estate under that administration. The California administrator, after paying the expenses of the administration, including inheritance taxes, paid out approximately $114,000 to the various legatees under the will, said legatees being the nephews, nieces, grandnephews and grandnieces, and a brother and sister of said testator, and including a $10,000 legacy to a Pasadena hospital association. After the payment of these legacies and the costs and inheritance taxes under the California laws the administrator there had on hand for distribution $439,727.17. The superior court of Los Angeles county, after approving the payment of the costs, expenses and inheritance tax, ordered and decreed that the remainder of the property, considting of said $439,727.17 in cash, be turned over, under the provisions of the will, to the Northern Trust Company of Chicago as trustee of said decedent, said sum to be set apart as provided by the will, as follows: Forth thousand dollars for each of the testator's nephews and nieces, the net income of said sum to be paid to them semiannually for 15 years after the testator's death, and at the end of said period the principal of said sums to be transferred, conveyed, and assigned to said nephews and nieces absolutely. If at any time during the continuance of said trust any of said nephews or nieces should die leaving lawful issue surviving, said lawful issue to take per stirpes the share in the income and principal which their parent or parents would have taken if living and at the same time said parents would have taken the same if living. In the event of the death of any such nephews or nieces without lawful issue, then the funds set apart for such deceased nephew or niece to be by said trustee at once transferred to and become a part of the residuary estate, upon trust, also, that there be paid out of the income of the balance of said trust estate, it any, to the brother and sister of said testator, in equal semiannual installments, $2,500 per annum during the life of the said brother and sister, and upon the further trust that the balance of said trust estate, if any, should be used for the creation, erection, maintenance, and endowment of an old men's home in or near Chicago. Then follows in the decree a detailed statement as to the management and care of said old men's home from said funds in accordance with the provisions of the will.

[1] November 2, 1906, the county court of Cook county appointed an appraiser to recommend the amount of inheritance tax in said estate. In March, 1907, the probate court of Cook county approved the final report of the Union Trust Company, administrator with the will annexed of said estate in Cook county, including the compromise settlement with the widow. In August, 1909, the appraiser reported to the county judge of Cook county his appraisement, and the report was approved by said county judge. From the order approving the report all parties appealed to the county court of Cook county. That court thereafter entered an order fixing an inheritance tax on all rights to succeed to the property of said testator, including the legacies that had been paid by the California administrator, less the exemptions allowed by the law of this state. The tax assessed by the order of the county court against the legacies paid in full, and the present value of those to be paid hereafter by the Northern Trust Company, was $6,567.10. There were also future interests included in said fund paid the trust company by the California administrator which might hereafter be required to pay an inheritance tax in this state. The order of the county court also appraised the property received by Maud A. Robinson King, the widow, at $2,044,685.82, and fixed the tax, after allowing the exemptions, at $20,246.85. The county court held as a proposition of law that the Union Trust Company of Chicago, both as administrator with the will annexed and in its corporate capacity, was liable for the inheritance tax of said widow, with interest until paid, ann was also liable for all inheritance taxes, with interest, due and owing in said estate, and that said Union Trust Company, as administrator with the will annexed and individually, and the Northern Trust Company, as trustee and individually, were jointly and severally liable for all inheritance taxes, and interest, on all legacies and successions, payable out of the funds limited to said Northern Trust Company.

It is insisted by appellants that the county court was without authority, under the law, to include the personal property situated in California in fixing the inheritance tax. They argue that the power to tax is limited to property over which the sovereign power of the state extends, and that the personal property of a resident decedent located outside of Illinois is not within the dominion of the state. The ancient maxim of the law was that the personal property followed the person. The great increase in that class of property has necessitated certain limitations of the maxim, especially in matters of taxation. ‘It is still the law that personal property is sold, transmitted, bequeathed by will, and is descendible by inheritance according to the law of the domicile and not by that of its situs.’ Eidman v. Martinez, 184 U. S. 578, 22 Sup. Ct. 515, 46 L. Ed. 697. The general rule in this country is that the succession to movable property is governed by the law of the owner's domicile at the time of his death. Frothingham v. Shaw, 175 Mass. 59, 55 N. E. 623,78 Am. St. Rep. 475. When, however, we apply the laws of another jurisdiction, we do so because the principles of comity recognize that those laws are applicable to a particular case. The succession determined by the law of domicile is generally recognized in other jurisdictions. This recognition, however, is limited by the policy of the local law, especially in matters of taxation and the subjecting of the personal property of nonresidents to the claims of local creditors. The law in California is that the distribution of the decedent's personal estate will be governed by the law of his actual domicile at the time of his death, subject to certain limitations not here involved. Estate of Apple, 66 Cal. 432, 6 Pac. 7;Murphy v. Crouse, 135 Cal. 14, 66 Pac. 971,87 Am. St. Rep. 90. ‘No one doubts that succession to a tangible chattel may be taxed wherever the property is found, and none the less that the law of the situs accepts its rules of succession from the law of the domicile, or that by the law of the domicile the chattel is part of a universitas and is taken into account again in the succession tax there.’ Blackstone v. Miller, 188 U. S. 189, 23 Sup. Ct. 277, 47 L. Ed. 439. There is no constitutional objection to a law...