State Et Rel. Graff v. Probate Court of St. Louis Cnty.

• Decision Date: 05 February 1915
• Docket Number: No. 19100[295].,19100[295].
• Citation: 150 N.W. 1094,128 Minn. 371
• Parties: STATE et rel. GRAFF et al. v. PROBATE COURT OF ST. LOUIS COUNTY et al.
• Court: Minnesota Supreme Court

128 Minn. 371

150 N.W. 1094

STATE et rel. GRAFF et al.

v.PROBATE COURT OF ST. LOUIS COUNTY et al.

No. 19100[295].

Supreme Court of Minnesota.

Feb. 5, 1915.

Certiorari by the State, on the relation of Melvina W. Graff and others, against the Probate Court of St. Louis County and others. Writ quashed.

Syllabus by the Court

The reciprocal exemption amendment to our inheritance tax law, made in 1911 (Laws 1911, c. 209), applies only where the laws of another state impose an inheritance tax upon, ‘transfers of personal property of decedents,’ but, ‘exempt or do not impose a tax upon transfers of personal property of residents of Minnesota having its situs in such state’; and the laws of another state, which impose such tax only where the property passes to collateral relatives or strangers, but do impose such tax where personal property within such state, belonging to residents of Minnesota, passes by will to such collateral relatives or strangers, do not bring the property of residents of that state within such exemption.

A nonresident decedent's personal property having a situs in this state is subject to the succession tax of this state, although the devolution of such property is governed by the law of the decedent's domicile.

The language of our statute indicates an intention on the part of the Legislature to impose a succession tax in all cases in which it has the power to impose such tax, and the statute cannot be construed as applying only where the devolution of the property is governed by our laws.

The devolution of debts owed by residents of this state, whether evidenced by promissory notes or not, and of the stock of corporations of this state, and of the stock of national banks located in this state, is subject to a succession tax in this state, although the debts were owing to, and the stock was held by, nonresident decedents.

The inheritance tax statute, as amended, does not infringe the constitutional provision that ‘no law shall embrace more than one subject, which shall be expressed in its title,’ nor the equality provisions of the state of federal Constitution, nor the provision against impairing the obligation of contracts.

Lyndon A. Smith, Atty. Gen., and William J. Stevenson, Asst. Atty. Gen., for relators.

Francis W. Sullivan, of Duluth, for respondent.

TAYLOR, C.

Edmund D. Graff, a resident of the state of Pennsylvania, died in that state on June 3, 1912, leaving a will by which he gave all his property to his wife Melvina W. Graff, and in which he designated her as executrix thereof. The will was admitted to probate in the state of Pennsylvania, and was subsequently admitted to probate in St. Louis county in this state. The inventory filed in the probate court of St. Louis county listed the following property for administration in that court:

+------------------------------------------------+
                ¦Real estate situated within the     ¦           ¦
                +------------------------------------+-----------¦
                ¦state of Minnesota of the value     ¦           ¦
                +------------------------------------+-----------¦
                ¦of                                  ¦$ 84,825 00¦
                +------------------------------------+-----------¦
                ¦152 shares of capital stock of First¦           ¦
                +------------------------------------+-----------¦
                ¦National Bank of Duluth, Minn.,     ¦           ¦
                +------------------------------------+-----------¦
                ¦of the value of                     ¦68,400 00  ¦
                +------------------------------------+-----------¦
                ¦25 shares of capital stock of the   ¦           ¦
                +------------------------------------+-----------¦
                ¦First State Bank of Tower,          ¦           ¦
                +------------------------------------+-----------¦
                ¦Minn., of the value of              ¦3,500 00   ¦
                +------------------------------------+-----------¦
                ¦993 shares of capital stock of      ¦           ¦
                +------------------------------------+-----------¦
                ¦Scott-Graff Lumber Company, a       ¦           ¦
                +------------------------------------+-----------¦
                ¦Minnesota corporation, of the       ¦           ¦
                +------------------------------------+-----------¦
                ¦value of                            ¦238,320 00 ¦
                +------------------------------------+-----------¦
                ¦A promissory note executed by       ¦           ¦
                +------------------------------------+-----------¦
                ¦Scott-Graff Lumber Company, of      ¦           ¦
                +------------------------------------+-----------¦
                ¦the value of                        ¦13,702 00  ¦
                +------------------------------------+-----------¦
                ¦Book account due from Scott-Graff   ¦           ¦
                +------------------------------------+-----------¦
                ¦Lumber Company of the value of      ¦80,260 00  ¦
                +------------------------------------+-----------¦
                ¦                                    ¦$489,007 00¦
                +------------------------------------------------+
                

On the ground that our laws impose a tax upon the right to succeed to the ownership of the property above mentioned, the Attorney General, on behalf of the state, presented a claim for such tax to the probate court. After an extended hearing, the claim was allowed. Thereupon the administratrix sued out a writ of certiorari and brought the matter before this court.

[1] 1. Among the amendments made to the inheritance tax law by the Legislature of 1911 (Laws 1911, c. 209) was the following:

‘No tax shall be imposed, however, upon any transfer of personal property within this state owned by a nonresident of this state at the time of his death, where by the laws of the state of the decedent's domicile, an inheritance, succession or transfer tax is imposed on transfers of personal property of decedents, provided the laws of such state exempt, or do not impose a tax upon transfers of personal property of residents of Minnesota having its situs in such state.’

This provision was repealed by the next Legislature, but was in force at the time of the death of Mr. Graff, and the relator contends that it exempted the succession to the personal property left by him from taxation under the Minnesota laws, for the reason that Pennsylvania levies a ‘collateral inheritance tax,’ as it is termed in the statute of that state, but levies no tax where, as in this case, the property passes to the surviving spouse.

The Pennsylvania statute (Act May 6, 1887 [P. L. 79]) imposes an inheritance tax where the property passes by will or by the intestate laws of that state to collateral relatives or to strangers upon ‘all estates, real, personal and mixed, of every kind whatsoever, situated within this state, whether the person or persons dying seised thereof be domiciled within or out of this state,’ but imposes no inheritance tax where the property passes ‘to or for the use of father, mother, husband, wife, children and lineal descendants born in lawful wedlock [children of a former husband or wife], or the wife, or widow of the son of the person dying seised or possessed thereof.’

In the case at bar, the entire property passed by will to the widow of the decedent, and is not subject to an inheritance tax under the laws of the state of Pennsylvania whether the domicile of the decedent be in that state or elsewhere. If the situation were reversed, and the decedent had been a resident of Minnesota and the property had been located in Pennsylvania, it is true, as claimed by the relator, that no tax upon the succession would be collected in Pennsylvania; but the reason why such tax would not be collected is because Pennsylvania has no law imposing a tax upon property which passes to the surviving spouse, and not because the decedent was a resident of Minnesota. The statute of Pennsylvania exacts no tax from property which passes to the surviving spouse or to near relatives of the decedent, but exacts a tax from all property which passes by will to remote relatives or to strangers, ‘whether the person or persons dying seised thereof be domiciled within or out of this state.’ The Pennsylvania courts apparently hold that the inheritance tax of that state is a tax upon the property itself, and not upon the right of succession thereto. Coleman's Estate, 159 Pa. 231, 28 Atl. 137; Bittinger's Estate, 129 Pa. 338, 18 Atl. 132. They also hold that the fiction that the situs of personal property follows the domicile of the owner ordinarily obtains; and that:

‘As a general rule, intangible personal property of a nonresident, such as bonds, mortgages and other choses in action, is governed, as to its situs, by the fiction of law above noticed, and hence such property is not subject to collateral inheritance taxation under our laws, because it is not ‘situated within this state.” Small's Estate, 151 Pa. 1, 25 Atl. 23.

Where they hold that the situs of the property is not in Pennsylvania, they of course hold that it is not taxable there. Countess de Noailles' Estate, 236 Pa. 213, 84 Atl. 665,46 L. R. A. (N. S.) 1167; Shoenberger's Estate, 221, Pa. 112, 70 Atl. 579, 19 L. R. A. (N. S.) 290, 128 Am. St. Rep. 737. But the also hold that the personal property of nonresidents may acquire a situs in Pennsylvania and become subject to the inheritance tax of that state. In Small's Estate, 151 Pa. 1, 25 Atl. 23, the decedent, a resident of Maryland, was a member of a limited partnership which conducted a mercantile business in Pennsylvania. The court held that the Pennsylvania law exacted in inheritance tax upon his interest in such partnership, and in support thereof quoted the following from the New York court:

‘The fiction or maxim, Mobilia personam sequuntur, is by no means of universal application. Like other fictions, it has its special uses. It may be resorted to when convenience and justice requires. In other circumstances, the truth and not the fiction affords, as it plainly ought to afford, the rule of action. * * * I can think of no more just and appropriate exercise of the sovereignty of a state or nation over property situated within it and protected by its laws, than to compel it to contribute toward the maintenance of...