of the property is within its jurisdiction for the purposes of direct taxation, but also under some circumstances an excise tax may be upheld upon the succession to property where a direct property tax might not be sustained. The only cases however in which a tax on the succession can be sustained in the absence of corporeal jurisdiction over the property itself are those in which some necessary incident in the transfer of title depends for its efficacy upon the law of the state levying the tax; and when property is not physically within the jurisdiction of the taxing power, and when its complete succession can be accomplished without invoking any privilege or sanction conferred by its laws, there is nothing to which taxation can attach.

With respect to real estate, the jurisdiction to levy an inheritance tax is confined to the state in which the real estate is located, since in case of intestacy the devolution of the property depends upon the law of such state and the will of a deceased non-resident can have no effect over real property unless it is admitted to ancillary probate in the state in which the property is situated. Consequently a state cannot levy an inheritance tax upon the succession to the real estate of a resident decedent situated in another state,' and conversely a state may tax the succession to the real estate of a non-resident decedent situated within its limits. When the interest of the decedent in the real estate is equitable, as in the case of shares in a real estate trust, the succession is nevertheless taxable in the state in which the real estate is situated. When however under the terms of a trust agreement the trustees hold both real and personal property and the interest of each beneficiary is a right to a share of the net proceeds when the entire trust property is sold, the entire share of each beneficiary is personal property and taxable according to the rules applicable to that class of property. Mortgages

1 Dana v. Treasurer & Receiver General, 227 Mass. 562 (1917).

2 Callahan v. Woodbridge, 171 Mass. 595 (1898).

3 Kinney v. Treasurer & Receiver General, 207 Mass. 368 (1911); Dana v. Treasurer & Receiver General, 227 Mass. 562 (1917); Priestley v. Treasurer & Receiver General, 230 Mass. 452 (1918).

4 Dana v. Treasurer & Receiver General, 227 Mass. 562 (1917); Priestley v. Treasurer & Receiver General, 230 Mass. 452 (1918). A state may tax the succession to shares in a real estate trust without regard to the location of the trust property or the domicile of the shareholder if the trustees live and the books are kept within its limits, so that resort must be had to the state to effect a transfer. Peabody v. Treasurer & Receiver General, 215 Mass. 129 (1913); Dana v. Treasurer & Receiver General, 227 Mass. 562, 570 (1917); Priestley v. Treasurer & Receiver General, 230 Mass. 452, 454 (1918).

5

of real estate are subject to the inheritance taxes of the state in which the real estate is situated, while the debt secured by the mortgage is taxable as personal property in the state of the mortgagee's domicile. When the real estate of a deceased nonresident is subject to a mortgage, only the excess of the value of the real estate over the amount of the mortgage is taxable in the state in which the real estate is situated, even if there was sufficient personal property in the estate to have paid off the mortgage debt."

The personal property of a decedent wherever located is treated as a unit and is subject to inheritance taxation in the state of the owner's domicile; and the same principle applies to a tax on the transfer of property made in contemplation of death when subject to an inheritance tax by the law of the decedent's domicile. Nevertheless the property of a decedent may also be taxed in a state in which it is found at the death of the decedent, if its presence there was more than transitory.10 Under this principle the presence within a state of securities, such as bonds and notes evidencing a debt, justify an inheritance tax upon the debt at the death of the owner of the securities.11 Upon the same principle shares of stock in a corporation may be taxed in a state in which the stock certificates are kept.12

Another ground for the subjection of personal property to the inheritance tax is the necessity of resorting to the jurisdiction of the state to enjoy the benefits of the succession. Whenever a right of pecuniary value which belonged to the decedent cannot be enjoyed or enforced by the person to whom it passed at his death without resorting to the jurisdiction of a

5 Kinney v. Treasurer & Receiver General, 207 Mass. 368 (1911); Hawkridge v. Treasurer & Receiver General, 223 Mass. 134 (1916).

6 Frothingham v. Shaw, 175 Mass. 59 (1899).

McCurdy v. McCurdy, 197 Mass. 248 (1908).

8 Bullen v. Wisconsin, 240 U. S. 625 (1916); Frothingham v. Shaw, 175 Mass. 59 (1899); Dana v. Treasurer & Receiver General, 227 Mass. 562 (1917). Keeney v. New York, 222 U. S. 525 (1912).

10 Blackstone v. Miller, 188 U. S. 189 (1903); Wheeler v. Sohmer, 233

U. S. 434 (1914); Callahan v. Woodbridge, 171 Mass. 595 (1898).

11 Wheeler v. Sohmer, 233 U. S. 434 (1914); Iowa v. Shimmer, 248 U. S. 115 (1918); Callahan v. Woodbridge, 171 Mass. 595 (1898). See also, Kennedy v. Hodges, 215 Mass. 112 (1913).

12 This would seem to follow from the decision in Hatch v. Reardon, 204 U. S. 152 (1907). although a contrary opinion is expressed, arguendo, in Kennedy v. Hodges, 215 Mass. 112, 115 (1917) which was followed in Clark v. Treasurer & Receiver General, 218 Mass. 292 (1914).

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certain state, such state may subject the succession to such property to inheritance taxes.13 For this reason the succession to stock in a corporation can be taxed in the state under the laws of which the corporation was established, without regard to the domicile of the decedent or the place in which the stock certificate was kept, for the succession cannot be enjoyed without resorting to the state of incorporation to effect a transfer of the stock. This principle does not, however, extend so far as to justify the taxation of the succession to stock in a corporation solely on the ground that the corporation owns real estate in the state seeking to impose the tax, even if the state has physical power to enforce the tax by requiring payment as a condition precedent to allowing the transfer of other property over which it has jurisdiction.15 When, however, a corporation is chartered in two or more states under the same name although it has but one issue of stock, and its property and franchises in the different states constitute the basis of the value of its stock, each one of the states may impose an inheritance tax on the succession to shares of the stock and in valuing the shares for the purpose of the tax include the property of the corporation wherever situated.16

Upon the same principle, if a debt can be enforced only by resorting to the courts of the debtor's domicile, the succession to the debt can be taxed in the state in which the debtor resides without regard to the domicile of the decedent or the place in which the securities which evidence the debt are kept." Conversely however, even if the debtor resides within the state seeking to impose the tax, if the debt can be fully enforced with

13 Blackstone v. Miller, 188 U. S. 189 (1903); Walker v. Treasurer & Receiver General, 221 Mass. 600 (1915).

14 Greves v. Shaw, 173 Mass. 205 (1899); Bliss v. Bliss, 221 Mass. 201 (1915). The same principle applies to shares in national banks in the state in which the bank is situated, Greves v. Shaw, 173 Mass. 205 (1899), and to shares in unincorporated associations in the state in which the principal place of business is located, supra Note 4.

15 Welch v. Treasurer & Receiver General, 223 Mass. 87 (1916).

16 Moody v. Shaw, 173 Mass. 375 (1899); Kingsbury v. Chapin, 196 Mass. 533 (1907); Welch v. Treasurer & Receiver General, 223 Mass. 87 (1916). Such a harsh rule will not be applied unless the statute requires it, Kingsbury v. Chapin, 196 Mass. 533 (1907).

17 Blackstone v. Miller, 188 U. S. 189 (1903); Bliss v. Bliss, 221 Mass. 201 (1915). This principle applies to simple contract debts and to debts evidenced by registered bonds; but whether it applies to bonds and notes negotiable by delivery is open to question. Bliss v. Bliss, 221 Mass. 201 (1915).

out resorting to the courts of such state, there is no jurisdiction to enforce the tax, even if the state by reason of control over other property of the decedent has physical power to exact payment.18

In taxing a succession resulting from the exercise of a power of appointment the test to be applied in determining whether property is taxable is whether the property is subject to the jurisdiction of the state.19 A state cannot tax property having a situs in another state merely because the donee of the power resided within its limits, since the donee of the power is not the owner of the property.20

The application of the foregoing principles frequently results in the taxation of the succession of the same property by two or more states, and it may be subject to the federal estate tax as well, but double or multiple taxation of this character does not violate any constitutional principle if each state is acting within its recognized jurisdiction." Double taxation cannot be evaded by marshalling the assets of the estate in such a way as to deprive a state of its inheritance tax, since the right of a state to the tax becomes vested on the death of the decedent,22 nor can it be evaded by forming a corporation merely for the purpose of holding stock and avoiding the necessity of a transfer upon the death of a person having the real beneficial interest.23

24

Ordinarily in determining whether a legacy or distributive share comes within a statutory exemption or in fixing the rate of taxation only property within the jurisdiction of the state imposing the tax is considered; but there is nothing unconstitutional in a statute establishing a graduated inheritance tax and providing that the tax should be first ascertained as if the entire estate of the decedent were subject to taxation and then assessed in the proportion that the property taxable within the state bears to the entire estate.25

18 Bliss v. Bliss, 221 Mass. 201 (1915).

19 Clark v. Treasurer & Receiver General, 218 Mass. 292 (1914).

20 Walker v. Treasurer & Receiver General, 221 Mass. 600 (1915).

21 Blackstone v. Miller, 188 U. S. 189 (1903). See also supra § 33.

22 Kingsbury v. Chapin, 196 Mass. 533 (1907).

23 Gardiner v. Treasurer & Receiver General, 225 Mass. 355 (1916). 24 Attorney General v. Barney. 211 Mass. 134 (1912).

25 Maxwell v. Bugbee, 250 U. S. 525 (1919).

48. Territorial Jurisdiction for the Levy of Excises The power to levy an excise depends upon control over the act, occupation or privilege which is the subject of the tax rather than upon the domicile of the taxpayer or the physical location of the property used in connection with the act, occupation or privilege taxed. Power to effectively prohibit the performance of an act until a tax has been paid thereon affords a means of enforcement which the law recognizes as sufficient to establish jurisdiction. Thus a state may impose an excise upon the performance of a certain act within its limits which can be lawfully enforced even when the act is performed by persons who are not residents of the state and with respect to property which has never been within its boundaries, as in the case of a stamp tax on sales, which may be enforced in the case of a transaction between non-residents respecting property located outside the state.2

Conversely a state cannot tax the performance of an act outside its territorial jurisdiction; it cannot continue to levy an occupation tax upon a corporation after it has ceased to do business within its limits.3

49. Territorial Jurisdiction for the Levy of Income Taxes

A state may tax the incomes of persons resident within its territorial limits arising from business carried on in other states, or from interstate commerce.1 It may doubtless tax the income from intangible personal property owned by its own citizens, without regard to the place where the securities representing such property are kept or where the tangible property or business which such securities represent or from which they derive their value is located. It may tax income received by one of its own citizens from a trust fund held by a trustee resident in another state. It is however open to serious question whether

1 Blackstone v. Miller, 188 U. S. 189, 205 (1903); Liverpool etc. Insurance Co. v. Orleans Board of Assessors, 221 U. S. 346, 354 (1911); Shaffer v. Carter, 252 U. S. 37, 49 (1920).

2 Hatch v. Reardon, 204 U. S. 152 (1907).

3 Provident etc. Assurance Society v. Kentucky, 239 U. S. 103 (1915). But an insurance company doing business within a state may be compelled to pay a tax on premiums paid by residents of the state, though actually received outside the state. Equitable Life Assurance Society v. Pennsylvania, 238 U. S. 143 (1915).

1 United States Glue Co. v. Oak Creek, 247 U. S. 321 (1918).

2 Maguire v. Trefry, 253 U. S. 12 (1920) affirming Maguire v. Tax Commissioner, 230 Mass 503 (1918).