G. L. c. 65, § 1] to the tax, for the reason that the change of the right of dower upon the death of the husband from an inchoate to a consummated right is not a passing of the property "by the laws regulating intestate succession." The right of curtesy on the other hand, being in its present form wholly a creature of statute, may with more propriety be held to be subject to the tax.' With respect to grants or gifts, it has been held that a deed of settlement, revocable or irrevocable, whether made before or after the enactment of the statute, under which the principal is not to vest in ownership or possession until the grantor's death and which does not so vest until the statute is in force is subject to the tax. As far as the exception of a bona fide purchase for full consideration is concerned, the consideration must actually equal in value the property transferred, and it is not enough that it is substantial or that the parties consider it sufficient." The taking out of an insurance policy payable to a designated beneficiary and the payment of the premiums by the insured is not a gift intended to take effect in possession or enjoyment after the death of the donor, and the amount paid to the beneficiary on the death of the insured is not subject to the tax.10 In the original statute there was no provision for the taxation of the acquisition of a complete interest in property by right of survivorship. In 1915 however it was held that the acquisition of a complete title in real estate by the surviving tenant by the entirety was not subject to the succession tax, because it was not acquired by intestate succession but by reason of the nature of the estate. The same decision was reached in the case of the exercise of the right of survivorship in real and personal property held in joint tenancy.12 In the follow 11 'Even, however, assuming that curtesy is not subject to the tax, if a surviving husband does not file his election to take curtesy and accepts the more favorable provisions of his wife's will, all the property which comes to him from his wife's estate is subject to the tax, and not merely the excess over what he was entitled to by virtue of his marital rights. Dana v. Dana, 226 Mass. 297 (1917). Crocker v. Shaw, 174 Mass. 266 (1899); New England Trust Co. v. Abbott, 205 Mass. 279 (1910); State St. Trust Co. v. Treasurer & Receiver General, 209 Mass. 373 (1911). As to gifts in contemplation of death, see G. L. c. 65, §3, infra, page 623. 10 State St. Trust Co. v. Treasurer & Receiver General, 209 Mass. 373 (1911). "Palmer v. Treasurer & Receiver General, 222 Mass. 263 (1915). [G. L. c. 65, § 1 ing year however the tax was specifically extended to cover the passing of any beneficial interest in property by survivorship in any form of joint ownership in which the decedent joint owner contributed during his life any part of the property held in such joint ownership or the purchase price thereof.13 It is however open to some doubt whether the statute is broad enough even now to cover the case of tenancy by the entirety. What Property is Subject to the Tax Under the original statute of 1891, which provided merely that all property within the jurisdiction of the commonwealth passing in the specified manner should be subject to the tax, it was held that the legislature had undertaken to impose a tax limited only by its constitutional powers,' and consequently that all personal property of decedents who were residents of this commonwealth of whatever nature and wherever kept was subject to the tax, because the succession of personal property takes place primarily by virtue of the laws of the owner's domicile. On the other hand, the personal property of a non-resident decedent kept within this commonwealth was held to be taxable here, because such property is within the state and subject to its jurisdiction. The property it was said has the protection of our laws and our laws are invoked for its administration. It was also held that shares of Massachusetts corporations and of national banks situated within this commonwealth owned by non-resident decedents and kept outside the state 13 St. 1916, c. 268, §1. 3 1 Kinney v. Treasurer & Receiver General, 207 Mass. 368 (1911). For the limits of legislative power in such cases, see supra, Part I, §47. 2 Real estate of a resident decedent located in another state is not subject to the tax; and this principle would exonerate from the tax a beneficial interest in land located in another state belonging to a resident decedent, although the interest was assignable without deed, when the holders of the beneficial interests were not associated together in any way; but shares in an unincorporated association owning real estate in other states and belonging to a resident decedent are taxable. Dana v. Treasurer & Receiver General, 227 Mass. 562 (1917). Personal property of a resident decedent, of whatever character, is taxable. Thus bonds of foreign corporations, though kept in another state and secured by mortgage of real estate in another state, stocks of foreign corporations and cash on deposit in another state are all taxable. Frothingham v. Shaw, 175 Mass. 59 (1899). Such a tax cannot be evaded by organizing a foreign corporation to hold the assets of a resident decedent. Gardiner v. Treasurer & Receiver General, 225 Mass. 355 (1916). 'Callahan v. Woodbridge, 171 Mass. 595 (1898). G. L. c. 65, § 1] were subject to the tax because such corporations having an abiding place here akin to the domicile of a natural person are subject to the jurisdiction of the commonwealth and the stockholders are the proprietors of the corporation. Although the situs of a debt is the domicile of the creditor and not that of the debtor and accordingly the debts and obligations of residents and of Massachusetts corporations owed to non-resident decedents were not subject to the general property tax, when the debt or obligation was evidenced by a tangible piece of paper as in the case of a bond, the state in which the paper was kept had jurisdiction thereof, and bonds either of Massachusetts or of foreign corporations owned by a non-resident decedent but kept within this commonwealth were held to be subject to the tax;" and when the debt or obligation could not be transferred to the person who succeeded thereto upon the death of the decedent, or enforced by him, without resorting to the jurisdiction of this commonwealth it was held subject to the tax without regard to the place where the paper which evidenced the debt was kept.' The assessment of the tax in such a broad and sweeping manner produced considerable revenue for the treasury of the commonwealth, but before many years had elapsed almost every state in the union had enacted an inheritance tax law and proceeded to enforce it in the same drastic manner. As a result Greves v. Shaw, 173 Mass. 205 (1899); Gardiner v. Treasurer & Receiver General, 225 Mass. 355 (1916). It was held in the former case that the fact that the executor was able to get the shares transferred to the legatees before proving the will here did not exempt him from paying the tax. Shares in real estate trusts when the trustees lived and managed the property in this state and the property is situated here are taxable, although the decedent was a non-resident and the shares were kept outside the state. Peabody v. Treasurer & Receiver General, 215 Mass. 129 (1913). See also Priestley v. Treasurer & Receiver General, 230 Mass. 452 (1918). 'Callahan v. Woodbridge, 171 Mass. 595 (1898). This principle does not extend so far as to justify the taxation of stock in a foreign corporation belonging to a non-resident decedent merely because the stock certificates were kept in this commonwealth. Clark v. Treasurer & Receiver General, 218 Mass. 292 (1914). Thus in Kinney v. Treasurer & Receiver General, 207 Mass. 368 (1911) it was held that notes belonging to a non-resident decedent and kept outside the state but secured by mortgage upon real estate within the state were subject to the tax. In Bliss v. Bliss, 221 Mass. 201 (1915) it was held that registered bonds of this commonwealth belonging to a non-resident decedent and kept outside the state were taxable, because they could not be transferred without resorting to the jurisdiction of this commonwealth; but that notes of a partnership belonging to a non-resident and kept outside the state were not taxable, although the principal place of business and the domicile of one of the partners was in this commonwealth, if another of the partners lived elsewhere, as the notes could be enforced without resorting to the courts of this commonwealth. [G. L. c. 65, § 1 the estates of decedents whose funds were invested in several different states were often made subject to two, three or even more inheritance taxes with respect to the same property. For reasons stated elsewhere such a result violated no constitutional rights, but it began to be felt that it was unjust as well as unwise, and concerted efforts were made throughout the country to mitigate the burden of duplicate inheritance taxation. 8 In 1907 a step was made in this direction in Massachusetts which involved the exemption of property of a non-resident decedent where a like exemption was made by the laws of his domicile in favor of citizens of this commonwealth; and in 1912 the state renounced all inheritance taxes upon the estates of non-resident decedents except upon their interests in real estate within this commonwealth.10 In 1907 also the commonwealth renounced the taxation of the property of resident decedents not situated within the commonwealth, if legally subject to a like tax elsewhere.11 Although a number of other states adopted a similar policy, it was not universally accepted, and the states which adhered to the principle of subjecting to the inheritance tax everything which lay within their constitutional power to reach profited at the expense of the states which had adopted a more equitable policy. Massachusetts finally gave up the attempt to bring about by its example the levying of inheritance taxes along lines of interstate comity, and in 1916 repealed the statute exempting property of resident decedents elsewhere taxed,12 and in 1920 Supra, Part I, §33. 'St. 1907, c. 563, §3. See G. L. c. 65, §5, infra, page 626. 10 St. 1912, c. 678. Under this statute it was held that the real estate of a non-resident decedent which was taxable included a mortgage of real estate within the commonwealth, Hawkridge v. Treasurer & Receiver General, 223 Mass. 134 (1916), and shares in a partnership association owning real estate in this commonwealth; but not shares in an association constituting a trust as distinguished from a partnership. Priestley v. Treasurer & Receiver General, 230 Mass. 452 (1918). Even under the former statute it was held that when real estate of a non-resident decedent situated in Massachusetts was subject to a mortgage the tax should be merely on the equity of redemption although the decedent left sufficient personal property in his own state to pay off the mortgage. McCurdy v. McCurdy, 197 Mass. 248 (1908). "St. 1907, c. 563, §3. Under this statute it was held that it was open to the courts of this state to determine for themselves whether property of a resident decedent was "legally subject" to a tax in another state, even if the tax had been sustained by the highest court of such state. Welch v. Treasurer & Receiver General, 227 Mass. 87 (1916). 12 St. 1916, c. 268, §3. The 1907 statute remains in force with respect to persons dying between September 1, 1907 and May 26, 1916. G. L. c. 65, § 1] resumed the taxation of personal property of non-resident decedents within its jurisdiction, except in the case of residents of states which exempted the property of citizens of this commonwealth under like circumstances.1 13 Exemptions It is to be remembered that there are no exemptions based on the character of the property of which a legacy or distributive share is composed. The so-called "tax exempt" securities are not exempt from the operation of the inheritance tax. Stocks of Massachusetts corporations and even United States bonds are included in determining the amount of the inheritance tax.1 The tax is not on the property but upon its transmission, and the property is the measure and not the subject of the tax. The only exemptions are based upon the character of the party receiving the legacy. The original statute provided that property passing "to or for (the use of) charitable, educational or religious societies or institutions, the property of which is exempt by law from taxation" should not be subject to the inheritance tax. Under this statute it was held that as there was no law exempting all the property of charitable, educational or religious societies or institutions from general taxation, but only their property when used in a certain way, it was not entirely clear what was meant, but the more reasonable interpretation was that bequests to institutions whose property is generally exempt should be exempt from this tax, regardless whether the particular piece of property bequeathed would itself be exempt. A bequest to a town to establish a public institution of one of the designated classes came within the literal wording of the statute and was consequently exempt.3 The exemption did not however embrace all charitable gifts but only those in which a charitable institution incorporated or unincorporated was trustee or cestui que trust.* 2 13 St. 1920, c. 396, §1. The 1912 statute remains in force with respect to persons dying between May 29, 1912 and May 4, 1920. 'Plummer v. Coler, 178 U. S. 115 (1900); Orr v. Gilman, 183 U. S. 278 (1901); Callahan v. Woodbridge, 171 Mass. 595 (1898). 2 Thus it was held in First Universalist Society v. Bradford, 185 Mass. 310 (1904) that the bequest of a parsonage to a religious society was exempt from the tax, although the parsonage itself was taxable. |