Senior v. Braden, No. 658

CourtUnited States Supreme Court
Writing for the CourtMcREYNOLDS
Citation100 A.L.R. 794,55 S.Ct. 800,295 U.S. 422,79 L.Ed. 1520
Docket NumberNo. 658
Decision Date20 May 1935
PartiesSENIOR v. BRADEN et al

295 U.S. 422
55 S.Ct. 800
79 L.Ed. 1520
SENIOR

v.

BRADEN et al.

No. 658.
Argued April 9, 10, 1935.
Decided May 20, 1935.

Mr. Murray Seasongood, of Cincinnati, Ohio, for appellant.

[Argument of Counsel from pages 422-426 intentionally omitted]

Page 426

Messrs. John W. Bricker, of Columbus, Ohio, and E. G. Schuessler, of Cincinnati, Ohio, for appellees.

Page 427

Mr. Justice McREYNOLDS delivered the opinion of the Court.

January 1, 1932—tax listing day—section 5328-1, the Ohio General Code1 provided that all investments and other intangible property of persons residing within the state should be subject to taxation. Section 5323 so defined 'investment' as to include incorporeal rights of a pecuniary nature from which income is or may be derived, including equitable interests in land and rents and royalties divided into shares evidenced by transferable certificates. Section 5638 imposed upon productive investments a tax amounting to 5 per centum of their income yield; and section 5389 defined 'income yield' so as to include the aggregate income paid by the trustee to the holder, etc. Pertinent portions of sections 5388 and 5389 are in the margin.2

Page 428

Appellant owned transferable certificates showing that he was beneficiary under seven separate declarations of trust, and entitled to stated portions of rents derived from specified parcels and land—some within Ohio, some without. On account of these beneficial interests he received $2,231.29 during 1931. The lands are adequately described in the margin.3

The tax officers of Hamilton county, where appellant resided, threatened to assess these beneficial interests, and then to collect a tax of 5 per centum of the income there-

Page 429

from. To prevent this, he instituted suit in the Common Pleas Court. The petition asked that section 5323, General Code, he declared unconstitutional and that appellees be restrained from taking the threatened action. The trial court granted relief as prayed; the Court of Appeals (48 Ohio App. 255, 193 N.E. 80) reversed, and its action was approved by the Supreme Court.

With commendable frankness, counsel admit that under the Fourteenth Amendment the state has 'no power to tax land or interests in land situate beyond its borders; nor has it power to tax land or interests in land situate within the State in any other manner than by uniform rule according to value.' Consequently, they say, 'if the property of appellant, which the appellees seek to tax in this case, is land or interest in land situate within or without the State, their action is unconstitutional and should be permanently enjoined.'

The validity of the tax under the federal Constitution is challenged. Accordingly, we must ascertain for ourselves upon that it was laid. Our concern in with realities, not nomenclature. Moffitt v. Kelly, 218 U.S. 400, 404, 405, 31 S.Ct. 79, 54 L.Ed. 1086, 30 L.R.A.(N.S.) 1179; Macallen Co. v. Massachusetts, 279 U.S. 620, 625, 626, 49 S.Ct. 432, 73 L.Ed. 874, 65 A.L.R. 866; Educational Films Corporation v. Ward, 282 U.S. 379, 387, 51 S.Ct. 170, 75 L.Ed. 400, 71 A.L.R. 1226; Lawrence v. State Tax Commission, 286 U.S. 276, 280, 52 S,.ct. 556, 76 L.Ed. 1102. If the thing here sought to be subjected to taxation is really an interest in land, then by concession the proposed tax is not permissible. The suggestion that the record discloses no federal question is without merit.

Three of the parcels of land lie outside Ohio; four within; they were severally conveyed to trustees. The declaration of trust relative to the Clark-Randolph Building Site, Chicago, is typical of those in respect of land beyond Ohio; the one covering East Sixth street property, Cleveland, is typical of those where the land lies in Ohio, except Lincoln Inn Court, Cincinnati. Each parcel has been assessed for customary taxes in the name of legal owner or lessee according to local law, without

Page 430

deduction or diminution because of any interest claimed by appellant and others similarly situated.

The trust certificates severally declare: That Max Senior has purchased and paid for and is the owner of an undivided 340/1275 interest in the Lincoln Inn Court property; that he is registered on the books of the trustee as the owner of 5/3250 of the equitable ownership and beneficial interest in the Clark Randolph Building Site, Chicago; that he is the owner of 6/1050 of the equitable ownership and beneficial interest in the East Sixth street property, Cleveland. In each declaration the trustee undertakes to hold and manage the property for the use and benefit of all certificate owners; to collect and distribute among them the rents; and in case of sale to make pro rata distribution of the proceeds. While certificates and declarations vary in some details, they represent beneficial interests which, for present purposes, are not substantially unlike. Each trustee holds only one piece of land and is free from control by the beneficiaries. They are not joined with it in management. See Hecht v. Malley, 265 U.S. 144, 147, 44 S.Ct. 462, 68 L.Ed. 949.

The state maintains that appellant's interest is 'a species of intangible personal property consisting of a bundle of equitable choses in action because the provisions of the agreements and declarations of trust of record herein have indelibly and unequivocally stamped that character upon it by giving it all the qualities thereof for purposes of the management and control of the trusts. At the time the trusts were created, the interests of all the beneficiaries consisted merely of a congeries of rights etc., and such was the interest acquired by appellant when he became a party thereto. * * * The rights of the beneficiary consist merely of claims against the various trustees to the pro rata distribution of income, during the continuance of the trusts, and to the pro rata distribution of

Page 431

the proceeds of a sale of the trust estates upon their termination.'

Appellant submits that ownership of the trust certificate is evidence of his interest in the land, legal title to which the trustee holds. This view was definitely accepted by the Attorney General of Ohio in written opinions Nos. 3640 and 3869 (Opinions 1926, pp. 375, 528) wherein he cites pertinent declarations by the courts of Ohio and of other states. See, also, 2 Cincinnati Law Rev. 255.

The theory entertained by the Supreme Court concerning the nature of appellant's interests is not entirely clear. The following excerpts are from the headnotes of its opinion which in Ohio constitute the law of the case:

'Land trust certificates in the following trusts (the seven described above), are mere evidences of existing rights to participate in the net rentals of the real estate being administered by the respective trusts.

'Ascribing to such certificates all possible virtue, the holder thereof is at best the owner of equitable interests in real estate divided into shares evidenced by transferable certificates. Section 5323, General Code (114 Ohio Laws, p. 715), does not provide for a tax against the equitable interests in land, but does provide a tax against the income derived from such equitable interests.'

Apparently no opinion of any court definitely accepts the theory now advanced by appellees, but some writers do give it approval because of supposed consonance with general legal principles. The conflicting views are elaborated in articles by Professor Scott and Dean Stone in 17 Columbia Law Review (1917) at pp. 269 and 467.

Maguire v. Trefry, 253 U.S. 12, 40 S.Ct. 417, 64 L.Ed. 739, much relief upon by appellees, does not support their position. There the Massachusetts statute undertook to tax incomes; the securities (personalty) from which the income arose were

Page 432

held in trust at Philadelphia; income from securities taxable directly to the trustee was not within the statute. The opinion accepted and followed the doctrine of Blackstone v. Miller, 188 U.S. 189, 23 S.Ct. 277, 47 L.Ed. 439, and Fidelity & Columbia Trust Co. v. Louisville, 245 U.S. 54, 38 S.Ct. 40, 62 L.Ed. 145, L.R.A. 1918C, 124. Those cases were disapproved by Farmers' Loan & Trust Co. v. Minnesota, 280 U.S. 204, 50 S.Ct. 98, 74 L.Ed. 371, 65 A.L.R. 1000. They are not in harmony with Safe Deposit & Trust Co. v. Virginia, 280 U.S. 83, 50 S.Ct. 59, 74 L.Ed. 180, 67 A.L.R. 386, and views now accepted here in respect of double taxation. See Baldwin v. Missouri, 281 U.S. 586, 50 S.Ct. 436, 74 L.Ed. 1056, 72 A.L.R. 1303; Beidler v. South Carolina Tax Commission, 282 U.S. 1, 51 S.Ct. 54, 75 L.Ed. 131; First National Bank v. Maine, 284 U.S. 312, 52 S.Ct. 714, 76 L.Ed. 313, 77 A.L.R. 1401.

In Brown v. Fletcher, 235 U.S. 589, 599, 35 S.Ct. 154, 157, 59 L.Ed. 374, we had occasion to consider the claim that a beneficial interest in a trust state amounts to a chose in action and is not an interest in the res, subject of the trust. Through Mr. Justice Lamar we there said:

'If the trust estate consisted of land, it would not be claimed that a deed conveying seven-tenths interest therein was a chose in action within the meaning of section 24 of the Judicial Code (28 USCA § 41). If the funds had been invested in tangible personal property, there is, as pointed out in the Bushnell Case (Bushnell v. Kennedy, 9 Wall. 387, 393, 19 L.Ed. 736), nothing in Section 24 to prevent the holder, by virtue of a bill of sale, from suing for the 'recovery of the specific thing, or damages for its wrongful caption or detention.' And if the funds had been converted into cash, it was still so far property—in fact instead of in action—that the owner, so long as the money retained its earmarks, could recover it or the property into which it can be traced, from those having notice of the trust. In either case, and whatever its form, trust property was held by the trustee, not in opposition to the cestui que trust, so as to give him a chose in action, but in possession for his...

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  • Miller Bros Co v. State of Maryland, No. 160
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    • United States Supreme Court
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    ...53 L.Ed. 275; First National Bank v. Maine, 284 U.S. 312, 326, 52 S.Ct. 174, 176, 76 L.Ed. 313; Senior v. Branden, 295 Page 354 U.S. 422, 55 S.Ct. 800, 79 L.Ed. 1520. Cf. Louisville & Jeffersonville Ferry Co. v. Kentucky, 188 U.S. 385, 23 S.Ct. 463, 47 L.Ed. 513; Central R. Co. v. Jersey Ci......
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    ...purposes, that New York may not levy a property tax upon appellant's interest, whether it be legal or equitable, see Senior v. Braden, 295 U.S. 422, 55 S.Ct. 800, 79 L.Ed. 1520, 100 A.L.R. 794; Safe Deposit & Trust Co. v. Virginia, 280 U.S. 83, 50 S.Ct. 59, 74 L.Ed. 180, 67 A.L.R. 386. We a......
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    ...29, 79 L.Ed. 228. See Burnet v. Brooks, 288 U.S. 378, 401, 402, 53 S.Ct. 457, 463, 464, 77 L.Ed. 844, 86 A.L.R. 747; Senior v. Braden, 295 U.S. 422, 432, 55 S.Ct. 800, 803, 79 L.Ed. 1520, 100 A.L.R. 794; Wheeling Steel Corp. v. Fox, 298 U.S. 193, 209, 210, 56 S.Ct. 773, 776, 777, 80 L.Ed. 1......
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    • United States Supreme Court
    • November 11, 1935
    ...263 U.S. 103, 44 S.Ct. 23, 68 L.Ed. 191. 9 Com. v. Hazelwood Savings & Trust Co., 271 Pa. 375, 114 A. 368. 10 Senior v. Braden, 295 U.S. 422, 429, 55 S.Ct. 800, 79 L.Ed. 1520. 11 See note 8, supra. 12 Act of July 15, 1897, P.L. 292, as amended by Act of April 25, 1929, P.L. 677 (72 PS Pa. §......
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60 cases
  • Miller Bros Co v. State of Maryland, No. 160
    • United States
    • United States Supreme Court
    • April 5, 1954
    ...53 L.Ed. 275; First National Bank v. Maine, 284 U.S. 312, 326, 52 S.Ct. 174, 176, 76 L.Ed. 313; Senior v. Branden, 295 Page 354 U.S. 422, 55 S.Ct. 800, 79 L.Ed. 1520. Cf. Louisville & Jeffersonville Ferry Co. v. Kentucky, 188 U.S. 385, 23 S.Ct. 463, 47 L.Ed. 513; Central R. Co. v. Jersey Ci......
  • People of the State of New York Cohn v. Graves, No. 404
    • United States
    • United States Supreme Court
    • March 1, 1937
    ...purposes, that New York may not levy a property tax upon appellant's interest, whether it be legal or equitable, see Senior v. Braden, 295 U.S. 422, 55 S.Ct. 800, 79 L.Ed. 1520, 100 A.L.R. 794; Safe Deposit & Trust Co. v. Virginia, 280 U.S. 83, 50 S.Ct. 59, 74 L.Ed. 180, 67 A.L.R. 386. We a......
  • Curry v. Canless, No. 339
    • United States
    • United States Supreme Court
    • May 29, 1939
    ...29, 79 L.Ed. 228. See Burnet v. Brooks, 288 U.S. 378, 401, 402, 53 S.Ct. 457, 463, 464, 77 L.Ed. 844, 86 A.L.R. 747; Senior v. Braden, 295 U.S. 422, 432, 55 S.Ct. 800, 803, 79 L.Ed. 1520, 100 A.L.R. 794; Wheeling Steel Corp. v. Fox, 298 U.S. 193, 209, 210, 56 S.Ct. 773, 776, 777, 80 L.Ed. 1......
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    ...263 U.S. 103, 44 S.Ct. 23, 68 L.Ed. 191. 9 Com. v. Hazelwood Savings & Trust Co., 271 Pa. 375, 114 A. 368. 10 Senior v. Braden, 295 U.S. 422, 429, 55 S.Ct. 800, 79 L.Ed. 1520. 11 See note 8, supra. 12 Act of July 15, 1897, P.L. 292, as amended by Act of April 25, 1929, P.L. 677 (72 PS Pa. §......
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