Riley v. Worcester County Trust Co., 3163.

Citation89 F.2d 59
Decision Date15 March 1937
Docket NumberNo. 3163.,3163.
PartiesRILEY, Controller of State of California, v. WORCESTER COUNTY TRUST CO.
CourtUnited States Courts of Appeals. United States Court of Appeals (1st Circuit)

George S. Fuller, of Boston, Mass. (Norman W. Bingham, Jr., and Burnham, Bingham, Pillsbury, Dana & Gould all of Boston, Mass., and W. H. H. Gentry, of Sacramento, Cal., on the brief), for appellants.

Merrill S. June, of Worcester, Mass. (Bradley B. Gilman, of Worcester, Mass., on the brief), for appellee.

Paul A. Dever, Atty. Gen., and Henry F. Long, of Boston, Mass., amici curiæ.

Before BINGHAM, WILSON, and MORTON, Circuit Judges.

BINGHAM, Circuit Judge.

This is an appeal from a decree of the District Court for Massachusetts granting an interlocutory injunction on a bill of complaint in the nature of a bill of interpleader brought by the executor of the will of Robert H. Hunt under the provisions of Judicial Code, § 24(26), as amended by the Act of January 20, 1936 (c. 13, § 1, 49 Stat. 1096, U.S.C. title 28, § 41, 28 U.S.C.A. § 41(26), which will be found in the footnote.1

The complainant, the Massachusetts executor, is a citizen of Massachusetts. The respondent, Henry F. Long, is the Commissioner of Corporations and Taxation of Massachusetts and a citizen of that state. The other respondents are Ray L. Riley, Controller of the state of California, W. H. H. Gentry, Inheritance Tax Attorney of the state of California, and Frank P. Sproul, Inheritance Tax Appraiser of that state, all citizens of California.

In the bill it is alleged that on June 26, 1935, the will of Robert H. Hunt was admitted to probate in Massachusetts; that the complainant was appointed executor under the will; that Mr. Hunt died on June 11, 1935, possessing at the time of his death certain real estate and a sizeable bank deposit in the state of California, and a like bank deposit in Massachusetts and considerable intangible property, the bulk of which was in the custody and possession of the complainant in Massachusetts; that on July 29, 1935, the Security-First National Bank of Los Angeles, Cal., was appointed administrator with the will annexed of the estate of Mr. Hunt by the superior court of California, in ancillary proceedings; that the complainant, as executor, had in its possession money and property of an amount and value exceeding $500, on which the taxing officials of the two states claim the right adversely to each other to assess a tax; that under the applicable statutes of Massachusetts (General Laws, c. 65, §§ 1, 6 as amended, chapter 65A and chapter 480 of the Acts of 1935) and California (section 2, c. 821 of the Statutes 1921, p. 1501, as amended, and section 3, c. 358 of the Statutes of 1935, p. 1271) complainant is also under obligation to pay any and all estate, inheritance, and succession taxes to said tax officials of the states of Massachusetts and California, respondents herein, irrespective of any demand made therefor, and that said respondent tax officials of both states are claiming to be entitled to the benefits thereof; that, under the provisions of said tax statutes of each state, a tax lien is imposed on all property of the estate of Hunt unless all taxes assessed by said tax officials are paid, and the respondents claim to be entitled to the benefits of such liens.

In paragraphs 8, 9, 10, and 12 of the bill it is alleged:

"8. Your complainant is informed and believes and therefore alleges that the respondent Henry F. Long, commissioner as aforesaid, has determined that the said Robert H. Hunt died domiciled in Massachusetts, and is asserting and has threatened and is about to assess and attempt to collect from your complainant and the Estate in its charge, estate and succession taxes under the provisions of said Massachusetts tax statutes, based upon said domicile or determination of domicile and in an amount in excess of one hundred thousand (100,000) dollars; and that if the said Robert H. Hunt had deceased a non-resident of and not domiciled in Massachusetts the estate and succession taxes under said provisions of Massachusetts tax statutes would be a comparatively nominal amount.

"9. Your complainant is informed and believes and therefore alleges that the respondents, Ray L. Riley, comptroller as aforesaid, W. H. H. Gentry, inheritance tax attorney as aforesaid, and Frank P. Sproul, inheritance tax appraiser, as aforesaid, have each severally or as agent one for another, individually or by their agent or agents, determined that the said Robert H. Hunt died domiciled in California and are asserting and have threatened and are about to assess and attempt to collect from your complainant and the Estate in its charge, estate, inheritance and succession taxes under the provisions of said California tax statutes, based upon said domicile or determination of domicile and in an amount in excess of one hundred thousand (100,000) dollars; and that if the said Robert H. Hunt had deceased a non-resident of and not domiciled in California the estate, inheritance and succession taxes under said provisions of California tax statutes would be a comparatively nominal amount.

"10. That it is impossible in law or fact for the said Robert H. Hunt to have been domiciled at his death in both Massachusetts and California and it should not be possible for estate, inheritance and succession taxes to be so asserted, threatened, assessed and collected by the tax officials or representatives of said two States."

"12. That therefore the threatened collection of both the California and Massachusetts taxes, each based upon an inconsistent claim of domicile, will deprive your complainant and the Estate in its charge of property without due process of law and deny it equal protection of the laws in contravention of the Fourteenth Amendment to the Constitution of the United States; that the threatened assessment and collection of both of said taxes, each based upon an inconsistent claim of domicile, is causing irreparable injury by interfering with the administration of the estate both in California and Massachusetts, causing extra expense, preventing distribution, compelling your complainant to maintain large cash reserves at low interest rates or at no interest to cover the threatened taxes and costs of litigation." (Italics supplied.)

It was further alleged that the main controversy related to a sum of $100,000 or more in the custody or possession of complainant and its obligation with respect thereto under said tax laws; that complainant had no adequate remedy at law; and that it had given bond payable to the clerk of court in such amount and with such sureties as the court had deemed proper, conditioned upon compliance with further orders or decrees of the District Court with respect to the subject matter of the controversy.

The prayers were (1) for a temporary injunction restraining the respondents, their agents and servants, until further order of the court, from taking any further action to fix or assess any estate, inheritance, or succession tax on transfers caused by the death of said Robert H. Hunt, and from taking any action to collect any such taxes "from the Estate of Robert H. Hunt, the Security-First National Bank of Los Angeles as administrator with the will annexed of the Estate of Robert H. Hunt, or your complainant"; (2) that the court determine the domicile of said Robert H. Hunt at the date of his death and then permanently enjoin those respondents who are officials of the nondomiciliary state from taking any action to collect any estate, inheritance, or succession tax based upon any domicile except as so determined; (3) that each of the respondents be required to set forth and plead their several adverse claims to the property in the custody and possession of complainant, and to any of the benefits due to the complainant's obligation to pay estate, inheritance, and succession taxes; (4) that the court determine the person or persons entitled to said money and property and to any benefit arising by virtue of complainant's obligation; (5) that the court determine the sum owed to any one or more of the respondents by complainant; (6) that the court adjudge that complainant is under no further obligation to any one or more of the respondents upon compliance with such decree as this court may make in this case.

The order of injunction here appealed from, after reciting the nature of the complaint, that a hearing had been had upon the California respondents' motion to dismiss the same as to them for want of jurisdiction and to vacate a temporary restraining order theretofore granted, and that it appeared there was danger of irreparable injury, reads:

"Ordered that the respondents, Henry F. Long, Commissioner of Corporations and Taxation of the Commonwealth of Massachusetts, Ray L. Riley, Controller of the State of California, W. H. H. Gentry, Inheritance Tax Attorney of the State of California, Frank P. Sproul, Inheritance Tax Appraiser of the State of California, and each of them, their agents, and servants, be, and they are hereby, enjoined until further order of this court, from taking any action to fix or assess any estate, inheritance or succession tax on transfers caused by the death of said Robert H. Hunt, and from taking any action to collect any estate, inheritance or succession tax from the Estate of Robert H. Hunt, the Security-First National Bank of Los Angeles as administrator with the will annexed of the Estate of Robert H. Hunt, or the complainant."

In their assignments of error the appellants, the officials of California, complain that the court erred (1) in ruling that the present suit comes within the scope of the Federal Interpleader Act; (2) in ruling that the Federal Interpleader Act, construed to include within its scope the present suit, is not invalid to that extent as being in violation of the Eleventh Amendment of the Constitution of the United States; (3) in ruling that the present suit is not a suit in law or...

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4 cases
  • Skandia America Reinsurance Corp. v. Schenck, 74 Civ. 5470
    • United States
    • U.S. District Court — Southern District of New York
    • November 21, 1977
    ...(1929) (emphasis in original); accord, Krisel v. Duran, 386 F.2d 179, 181 (2d Cir. 1967) (per curiam). Thus, in Riley v. Worcester Cty. Trust Co., 89 F.2d 59, 65-68 (1st Cir.), aff'd on other grounds, 302 U.S. 292, 58 S.Ct. 185, 82 L.Ed. 268 (1937), the Court of Appeals for the First Circui......
  • Worcester County Trust Co v. Riley
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    • December 6, 1937
    ...defendants until further order of the court, from taking any action to assess the tax. The Court of Appeals for the First Circuit reversed, 89 F.2d 59, holding that the maintenance of the suit is an infringement of the Eleventh Amendment, which provides that: 'The Judicial power * * * shall......
  • Baumann v. Smrha
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    ...R. & Light Co. v. State of Wisconsin ex rel. City of Milwaukee, 252 U.S. 100, 106, 40 S.Ct. 306, 64 L.Ed. 476; Riley v. Worcester County Trust Co., 1 Cir., 89 F.2d 59, 66, affirmed 302 U.S. 292, 58 S.Ct. 185, 82 L. Ed. 7 United States v. United Shoe Machinery Co., 8 Cir., 264 F. 138, 151, a......
  • Kaiser v. Standard Oil Co. of New Jersey, 8154.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • April 1, 1937

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