some circumstances be taxed by the state in which such property is situated or power exercised." 45. Particular Classes of Intangible Property Upon the principle that the situs of intangible property is the domicile of the owner, it is universally held that a debt is taxable at the domicile of the creditor, since the creditor and not the debtor is clearly the owner of a debt.1 It was formerly considered that as a corollary to the foregoing rule a state had no jurisdiction to tax a debt merely by reason of the residence of the debtor within its limits. The later cases have however held that the state having jurisdiction over the debtor also has the constitutional power to assert and maintain for itself a situs of the debt for purposes of taxation and to levy a tax thereon against the creditor domiciled in another state. This principle applies not only in the case of inheritance taxes, but to property taxes as well; to taxes on debts secured by mortgage and to taxes on unsecured debts as well, whether expressed by notes or existing as bald accounts current. Jurisdiction in such cases is based upon the fact that ordinarily it is necessary for the creditor to resort to the courts of the debtor's domicile to enforce payment of the debt. 3 4 In the case of debts secured by mortgage of real estate there is also jurisdiction to tax the debt in the state in which the 6 Thus a mortgage may be taxed to the mortgagee by the state in which the mortgaged land is situated, Savings etc. Society v. Multnomah County, 169 U. S. 421 (1898); a bank deposit may be taxed to the depositor in the state in which the bank is situated, Fidelity etc. Trust Co. v. Louisville, 245 U. S. 54 (1917); stock in a corporation may be taxed in the state in which the corporation is organized, Corry v. Baltimore, 196 U. S. 466 (1905); Rogers v. Hennepin County, 240 U. S. 184 (1916); Bellows Falls Power Co. v. Commonwealth, 222 Mass. 51 (1915); and a franchise may be taxed in the state in which it is exercised, Louisville etc. Ferry Co. v. Kentucky, 188 U. S. 385 (1903), although in each case the owner of the property is resident in another state. 1 Kirtland v. Hotchkiss, 100 U. S. 491 (1879); Bonaparte v. Tax Court, 104 U. S. 592 (1881). See also Frothingham v. Shaw, 175 Mass. 59 (1899). The fact that a debt is secured by mortgage of real estate in another state does not deprive the state of the creditor's domicile of the right to tax the debt, Kirtland v. Hotchkiss, 100 U. S. 491 (1879). 2 State Tax on Foreign Held Bonds, 15 Wall. 300 (1872); Murray v. Charleston, 96 U. S. 432 (1877). 3 Infra § 47. 4 Savings etc. Society v. Multnomah County, 169 U. S. 432 (1898). 5 Liverpool etc. Insurance Co. v. Orleans Board of Assessors, 221 U. S. 346 (1911). See also Bliss v. Bliss, 221 Mass. 201 (1915). 6 real estate is situated, and, in the case of state and municipal bonds and bank notes current as money, there is a taxing situs where the paper writings which express the debt are kept;' and when one employs his capital in creating credits or lending money as a permanent business in another state, or for some business advantage deposits evidences of indebtedness in another state, the debts may be taxed in the state in which they have thus acquired a "business situs". Shares of stock in corporations are taxable at the domicile of the stockholders without regard to the state from which the corporation received its charter, or the place where its property is located or its business carried on, and the state in which a corporation is chartered cannot even by express legislation so far invest its stock with a local situs that it cannot be taxed when owned by residents of another state;1o but a state may by virtue of its authority over corporations of its own creation tax all the shares of such corporations regardless of the domicile of the shareholders.11 So also, while it commonly has been sup 6 Savings etc. Society v. Multnomah County, 169 U. S. 432 (1898). See also Kinney v. Treasurer & Receiver General, 207 Mass. 308 (1911). 7 State Tax on Foreign Held Bonds, 15 Wall. 300 (1872). See also Callahan v. Woodbridge, 171 Mass. 595 (1898); and see as to promissory notes Wheeler v. Sohmer, 233 U. S. 434 (1914) supra section 44. 8 New Orleans v. Stempel, 175 U. S. 309 (1899); Bristol v. Washington County, 177 U. S. 133 (1900); State Board of Assessors v. Comptoir Nationale D'Escompte, 191 U. S. 388 (1903); Scottish etc. Insurance Co. v. Bowland, 196 U. S. 611 (1905); Metropolitan Life Insurance Co. v. New Orleans, 205 U. S. 395 (1907). A foreign insurance company cannot be taxed on the so-called loans made through its local agents to residents of a state, since such transactions are not really loans, but deductions from the liability of the insurance company to its policy holders. Orleans Board of Assessors v. New York Life Insurance Co., 216 U. S. 517 (1910). A foreign insurance company may however be taxed on the amounts due for premiums on which credit has been extended, either to the insured, Liverpool etc. Insurance Co. v. Orleans Board of Assessors, 221 U. S. 346 (1911), or to the local agents of the company, Orient Insurance Co. v. Orleans Board of Assessors, 221 U. S. 358 (1911). 9 Sturgis v. Carter, 114 U. S. 511 (1885); New Orleans v. Houston, 119 U. S. 265, 277 (1886); Kidd v. Alabama, 188 U. S. 730 (1903); Wright v. Louisville etc. R. R. Co., 195 U. S. 219 (1904); Union Refrigerator Transit Co. v. Kentucky, 199 U. S. 194 (1905); Darnell v. Indiana, 226 U. S. 390 (1912); Hawley v. Malden, 232 U. S. 1 (1914); Great Barrington v. Berkshire County Commissioners, 16 Pick. 572 (1835); Dwight v. Boston, 12 Allen 316 (1866); Hawley v. Malden, 204 Mass. 138 (1910); Bellows Falls Power Co. v. Commonwealth, 222 Mass. 51 (1915); Welch v. Treasurer & Receiver General, 223 Mass. 87 (1916). 10 Bellows Falls Power Co. v. Commonwealth, 222 Mass. 51 (1915). 11 Corry v. Baltimore, 196 U. S. 466 (1905); Rogers v. Hennepin County, 240 U. S. 184 (1916); Bellows Falls Power Co. v. Commonwealth, 222 Mass. 51 (1915); Welch v. Treasurer & Receiver General, 223 Mass. 87, 92 (1916). posed that the certificate of stock in a corporation can have no independent situs, dependent upon its physical location, apart from the domicile of the corporation or of the owner, recent cases seem to indicate that there may be a taxing situs where the stock certificate is kept.12 But the shares of stock in a corporation cannot be taxed by a state merely because the corporation owns property within such state.13 Deposits in a bank may be taxed at the domicile of the depositor, even if the bank is located in another state; but they may also be taxed in the state in which the bank is situated if they are used as incidental to the employment of capital in business in such state,15 and probably are locally taxable even if they are not used in business and are deposited in a bank in another state merely for the convenience of the depositor.16 17 A franchise or privilege derived from the government of a state has its situs for the purposes of taxation in the state by which it was granted rather than in the domicile of the holder or grantee. The mere right to exist as a corporation is a franchise, but such franchise is not taxable in any state other than that by which the franchise was granted.18 When a state taxes a foreign corporation on account of its franchise, it is the privilege of doing business in such state which is taxed, and not the privilege of existing as a corporation; and conversely the state of incorporation cannot of course tax a corporation for the privilege of doing business in another state.1o Accordingly when a corporation does business in several states the franchise to carry on business as distinguished from the franchise to exist as a corporation has a taxing situs wherever the business is carried on, without regard to the state of incorporation or the home office of the company and may be included in the aggregate assets of the corporation and the portion of such assets may be 12 Reardon v. New York, 204 U. S. 152 (1907); Welch v. Treasurer & Receiver General, 223 Mass. 87, 93 (1916). 13 Welch v. Treasurer & Receiver General, 223 Mass. 87 (1916). 14 Fidelity etc. Trust Co. v. Louisville, 245 U. S. 54 (1917). 15 New Orleans v. Stempel, 175 U. S. 309 (1899). See also Blackstone v. Miller, 188 U. S. 189 (1903). 16 Fidelity etc. Trust Co. v. Louisville, 245 U. S. 54 (1917). 17 Louisville etc. Ferry Co. v. Kentucky, 188 U. S. 385 (1903). 18 American Glue Co. v. Commonwealth, 195 Mass. 528 (1907). 19 Louisville etc. Ferry Co. v. Kentucky, 188 U. S. 385 (1903). assessed in a state proportionate to the business carried on within such state as compared with the total business of the corporation.20 46. The Situs of Personal Property in the Hands of a Fiduciary In some jurisdictions the situs of the personal property of a deceased person is considered to be prima facie the place where the deceased last dwelt.1 The notion that a man's personal property upon his death may be regarded as a unit and taxed as such, even if qualified, is still recognized in this country, and while property of a deceased person which has acquired a situs in a state other than that in which he last dwelt may doubtless be taxed in such state, it is not at all clear that so far as the United States constitution is concerned it may not also be taxed to his executor in the state in which the decedent last dwelt. In this commonwealth however the power of the state to tax the personal estate of a deceased person is ascribed to jurisdiction over the executor or administrator as legal owner of the property and depends upon the domicile of the executor or administrator except in the case of property which has acquired a situs elsewhere. It has accordingly been held that a non-resident executor of a resident decedent is not taxable for intangible personal property situated in another state and which he holds as ancillary executor under appointment from the courts of such state; and that even a resident executor of a resident decedent is not taxable for personal property situated in another state which is held by an ancillary administrator who is a resident of such state; for the legal title is in the ancillary administrator and not within the ownership, possession or control of the executor. As the trustee is the legal owner of property held in trust, 20 Adams Express Co. v. Ohio State Auditor, 166 U. S. 185 (1897). 1 Carpenter v. Pennsylvania, 17 How. 456 (1848); Sears v. Nahant, 215 Mass. 329 (1913). 2 Eidman v. Martinez, 184 U. S. 578, 586 (1902); Bullen v. Wisconsin, 240 U. S. 625, 631 (1916); Fidelity etc. Trust Co. v. Louisville, 245 U. S. 54 (1917). 3 See Cotton v. Boston, 161 Mass. 8 (1894). 4 The statement in the text applies only to situs as between different states. As between different towns in the commonwealth another rule applies. See infra page 245. 5 Putnam v. Middleborough, 209 Mass. 456 (1911). 6 Gray v. Lenox, 215 Mass. 598 (1913). such property is taxable at the domicile of the trustee unless it has acquired a situs in some other state so that it would not be taxable at the domicile of the trustee if held by him in his own right. Intangible property held in trust is taxable at the domicile of the trustee, although the trustee was appointed by the probate court of another state, the beneficiaries are residents of another state and the securities in which the property is invested are physically located in another state. On the other hand the beneficiary has important property rights in the trust fund which are personal to him and which may be taxed as property in the state of the beneficiary's domicile, although the trustee resides and the securities are kept in another state." That there may be as a consequence double taxation of the same property does not make the taxation of trust property in either case unconstitutional." When there is more than one trustee, and the trustees are residents of different states, but as commonly happens in such cases it appears that the trustees were appointed by the courts of the state in which the securities are physically present and the managing trustee lives in such state, the entire trust fund is prima facie taxable in such state.10 It is probable however that a statute requiring the taxation of a proportionate part of the trust fund in a state in which one of the other trustees resided would be constitutional, although it would result in double taxation.11 47. Situs of Property for Purposes of Inheritance The power of the state to levy inheritance taxes is less subject to limitations based upon the situs of property than its power to levy direct property taxes, for not only does the state have the power to levy taxes on the succession of property which by reason of the domicile of the owner or the physical presence ? Hemenway v. Milton, 217 Mass. 230 (1914); Welch v. Boston, 221 Mass. 155 (1915). 8 Hunt v. Perry, 165 Mass. 287 (1896); Maguire v. Tax Commissioner, 230 Mass. 503 (1918). 9 Hunt v. Perry, 165 Mass. 287 (1896). 10 Newcomb v. Paige, 224 Mass. 516 (1916); Crocker v. Malden, 229 Mass. 313 (1918). 11 Newcomb v. Paige, 224 Mass. 516 (1916). |