Welch v. Treasurer and Receiver General.
| Decision Date | 01 March 1916 |
| Citation | 223 Mass. 87 |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
| Parties | FRANCIS C. WELCH & another, administrators, v. TREASURER AND RECEIVER GENERAL. |
November 4, 1915.
Present: RUGG, C.
J., LORING, BRALEY DE COURCY, & CROSBY, JJ.
Tax, On legacies and successions. Jurisdiction. Conflict of Laws. Words "Legally subject." Under St. 1909, c. 490, Part IV Section 3, St. 1911, c. 502,
Section 1, and St 1912, c. 678, Section 2, providing in substance that property of a resident of this Commonwealth which is not therein at the time of his death shall not be subject to a legacy tax if "legally subject" in another State or country to a tax of like character and amount to that here imposed, and that, if it is "legally subject" in such other State or country to a tax of like character but less in amount than that here imposed, which shall be actually paid or secured, it shall be taxable here only for the difference, it is for the courts of this Commonwealth to determine whether such property is "legally subject" to such a tax in another State or country.
By the foregoing provisions, the Legislature intended to surrender the power of this Commonwealth to impose a succession tax upon property of a resident of this Commonwealth which is not therein at the time of his death only when a succession tax has been levied by another State or country which it was within the jurisdictional power of such State or country to levy.
Jurisdiction for the purpose of imposing a succession tax exists only when the exercise of some essential privilege incident to the transfer of the title depends for its legality upon the law of the State levying the tax.
Where a resident of this Commonwealth at the time of his death owned shares of stock in a corporation incorporated in another State, such shares have a situs both in this Commonwealth, which is the owner's domicil, and in such other State, which is the domicil of the corporation, sufficient to give jurisdictional power to both States to impose a succession tax.
Where a resident of this Commonwealth at the time of his death owned shares of stock in a corporation incorporated in another State and owning property in a third State, such shares are not, under the provisions of
St. 1909, c.
490, Part IV, Section 3, St. 1911, c. 502,
Section 1, and St. 1912, c. 678, Section 2, "legally subject" to a succession tax in the third State, because that State has no jurisdictional power to levy the tax; and, even if such a tax is levied and paid in such State, there should not be any deduction by reason of such payment from the tax here imposed upon the shares by the provisions of the statute.
If a resident of this Commonwealth at the time of his death owns shares of capital stock in a railroad corporation incorporated in three other
States in which it operates its railroad, each of such three other States has jurisdictional power to impose a succession tax upon the shares.
In the absence of something to indicate inequality before the law, inevitable and general disproportion, or oppressiveness or discrimination, a succession tax imposed by another State within its jurisdictional powers upon shares of stock in a corporation there incorporated, is a tax to which the shares there are "legally subject," and its amount cannot be questioned in the computation of the tax to be imposed in this Commonwealth under the provisions of St. 1909, c. 490,
Part IV, Section 3, as amended by St. 1911, c. 502, Section 1, and St. 1912, c. 678, Section 2.
In this case in imposing a succession tax upon shares of the capital stock of a railroad corporation incorporated in Michigan, Illinois and
Wisconsin, which were owned by a decedent domiciled in Massachusetts at the time of his death, a Probate Court of the State of Michigan computed the tax as though the corporation were incorporated solely in Michigan.
The amount of the tax was paid without the matter being adjudicated in any higher court, and this court held that, the State of Michigan having jurisdiction to impose a succession tax and it not appearing that the tax was oppressive, irrational or disproportional in law, its amount was not open to question, and therefore it was a succession tax to which the shares were "legally subject" in Michigan and, it having been paid, its amount should be considered in computing the succession tax due in this
Commonwealth under St. 1909, c. 490, Part IV, Section 3, as amended by
St. 1911, c.
502, Section 1, and St. 1912, c. 678, Section 2.
B. Corneau, for the plaintiff. W. H. Hitchcock, Assistant Attorney General, for the defendant.
This is a petition for the refunding of an inheritance tax. The petitioners are administrators of the estate of Eleonora R Sears, late of Beverly in this Commonwealth. The issue relates to the inheritance tax payable on account of two items of railroad stock, upon which a similar tax has been paid in Michigan. The deceased owned two hundred forty-five shares of stock of the
Chicago and Northwestern Railway Company. That corporation was organized and exists under the laws of the States of Illinois, Wisconsin and Michigan. It has but one capital stock and conducts its business as a single corporation. Seven per cent in value of its total property was situated in the State of Michigan. The deceased also owned one hundred shares of the preferred stock of the Chicago, Milwaukee and St. Paul Railway Company. That corporation was organized and exists solely under the laws of the State of Wisconsin, although it has lines of railroad in that State, in Michigan and in other States. By judicial proceedings in Wisconsin, it was determined that a tax was due to that sovereignty from the estate of the deceased on account of her shares in the Chicago and Northwestern Railway Company, at the rate of one per cent upon fifty-four and six hundred and three thousandths per cent of the value of her holdings of that stock, that being the percentage of the total value of the property of that corporation which is situated in Wisconsin. The State of Wisconsin also collected a tax at the rate of one per cent upon the entire value of her holdings of stock in the Chicago, Milwaukee and St. Paul Railway Company. By judicial proceedings in the State of Michigan, it was determined that a tax was due to that State from the estate of the deceased, on account of her ownership of shares of stock in these two corporations, at the rate of one per cent upon the full value of each of such holdings. These taxes have been paid. Other property of the deceased was subject to an excise succession tax in Michigan, which has been paid and about which no question is made. Subsequently, the tax commissioner of this Commonwealth, in determining the taxes due on account of the stock here in question, deducted from the taxes payable in this Commonwealth the full amount of the taxes paid to the State of Wisconsin. He declined to deduct any part of the taxes paid to the State of Michigan on account of her ownership of stock in the Chicago, Milwaukee and St. Paul Railway Company, and deducted only a part of the taxes paid to Michigan on account of her ownership of shares of stock in the Chicago and Northwestern Railway Company.
The general question, whether the petitioners are entitled to recover in whole or in part, depends upon an interpretation of the controlling section of our tax law. St. 1909, c. 490, Part IV, Section 3, as amended by St. 1911, c. 502, Section 1, and St. 1912, c. 678, Section 2. [*] The crucial point is to determine the meaning of the words "legally subject in another State or country to a tax" as applicable to property not within the Commonwealth belonging to the estate of a deceased resident and actually taxed in another State. It has been decided by a court of competent jurisdiction, though not by the highest court, in the State of Michigan, that both these holdings of stock were subject to a succession tax in that State, and that the amount which has been paid is the correct amount. It is not contended by the defendant that the laws of Michigan did not authorize the imposition of these taxes. Therefore, it is not necessary to discuss or decide whether this court would be required in interpreting our statute to review at all and, if at all, to what extent it would review the interpretation of the tax statutes of another State given by the courts of that State. But it is urged by the defendant that Michigan had no jurisdiction to impose such taxes and that that question is one which must be determined by Massachusetts tax officers and courts.
The governing words occur in a Massachusetts tax statute, which is the guide for the tax officers of this Commonwealth in the performance of their duties. Whether property is legally subject to a tax in another State is not a question in its essence dependent upon the sole determination of the taxing State. That question often is settled by the Supreme Court of the United States in passing upon contentions arising under the Fourteenth Amendment. The amount of the tax due to this Commonwealth depends upon a correct decision whether the property is subject to taxation in another State or country. The amount of a tax due to any State is one naturally to be decided by the courts of the taxing
State. Whether such property legally can be made subject to taxation in another State depends upon general principles of law as to which an authoritative interpretation as between the several States is made by the Supreme Court of the United States.
We are of opinion that the courts of this Commonwealth must decide whether the property of a deceased resident is "legally subject" to taxation in another State or country, in order to...
To continue reading
Request your trial