Hibbard v. Thompson , 317 Mo. 986 ( 1927 )

This case originated in a judgment of the Probate Court of Holt County, Missouri, assessing an inheritance tax against the estate of Charles D. Zook, deceased. On appeal to the circuit court the cause was submitted upon the following agreed statement of facts:

"The decedent, Charles D. Zook, died intestate on the 22nd day of November, 1922, a resident of Holt County, Missouri. At the time of his death he owned a large estate situate in Holt County, and also owned stock in the Byrne-Hammer Dry Goods Company, a corporation, organized under the laws of Nebraska, and located and doing business in the city of Omaha, of the par value of $179,000. The certificates of stock were not in the State of Missouri at the time of his death, but were in a safety deposit box rented and kept by him in the city of Omaha.

"In due time after the death of deceased, Mina Wright, of Oregon, Missouri, was appointed by the Probate Court of Holt County, to appraise the said estate for the purpose of the state inheritance tax. In her return she listed the above-mentioned stock in the Omaha corporation, but did not assess a tax on account of it, holding that the stock was not liable to tax in Missouri. The Probate Court of Holt County overruled the appraiser, listed the stock in the Omaha corporation as subject to the tax and assessed the inheritance tax accordingly. The administratrix has appealed.

"The sole question before the court is whether or not the transfer of the stock in the Nebraska corporation is subject to the inheritance tax laws of Missouri. The administratrix contends that it is not subject to the said tax, and the attorney-general claims that it is."

The circuit court affirmed the action of the probate court in the following terms:

"The court doth find all the issues in favor of the State of Missouri, and doth more particularly find that the Nebraska corporation stock belonging to this resident estate passed under the intestate laws of Missouri, and is, therefore, subject to the Missouri transfer and inheritance tax.

"Wherefore, it is ordered, adjudged and decreed that said stock should be included, along with the other property, in the appraiser's inheritance tax report, and should bear its proper legal inheritance tax, and the clerk of this court is ordered to transmit a certified copy of this judgment and decree to the Probate Court of Holt County, Missouri, and it is further ordered that the judgment of the said probate court be affirmed and that said estate bear all costs."

After a timely and unavailing motion for a new trial, the administratrix appealed. The motion for a new trial set up the following grounds:

"First. That the finding and judgment of the court is against the agreed statement of facts, and against the law under said agreed statement of facts.

"Second. That the judgment was for the wrong party.

"Third. That the court erred in ruling that the shares of stock owned by deceased at his death, in the Byrne-Hammer Dry Goods Co., a corporation of the State of Nebraska, were subject to an inheritance tax under the laws of the State of Missouri."

Appellant's assignment of errors is as follows:

"1. The finding and judgment is against the law under the agreed statement of facts.

"2. The court erred in ruling that the shares of stock owned by deceased at his death in the Byrne-Hammer Dry Goods Company, a corporation of the State of Nebraska, were subject to an inheritance tax under the laws of the State of Missouri.

"3. The levy and collection by the State of Missouri of a tax on the transfer of stock in the Byrne-Hammer Dry Goods Company, a corporation, situate in Nebraska, is in violation of the Fourteenth Amendment to the Constitution of the United States of America, and of Section 30 of Article 2 of the Constitution of Missouri."

We observe at the outset that the corporate stock here in question is intangible property (13 C.J. 387; Foster v. Potter, 37 Mo. l.c. 530; Armour Bros. Banking Co. v. St. Louis Nat. Bank, 113 Mo. l.c. 20), and the force and effect of whatever our ruling may be in this case will necessarily be limited to intangibles.

At the conclusion of his brief counsel for appellant thus sums up the propositions for which he contends:

"That the situs of the stock of the Nebraska corporation is Nebraska and not Missouri.

"That the title to the stock can be transferred only by administration.

"That the administration laws of Missouri have no effect or power beyond the limits of Missouri."

The authorities cited in support of appellant's first proposition and the property involved in each case are as follows:

Richardson v. Busch, 198 Mo. 175, bonds of a foreign corporation, owned by a non-resident; State ex rel. Taylor v. St. Louis, 47 Mo. 594, bonds of a Missouri corporation, owned by a non-resident; Leavell v. Blades, 237 Mo. 695, gold dust and a promissory note, situate outside the State, owned by a resident; State ex rel. v. Lesser, 237 Mo. 310, shares of stock in a foreign corporation owned by a resident; Partnership Estate of Henry Ames Co., 52 Mo. 290, notes and accounts, situate in foreign State, owned by a resident; State ex rel. v. Bunce,187 Mo. App. 607, a note, situate in Missouri, owned by a non-resident; McCarty v. Hall, 13 Mo. 480, a note, situate in Missouri, owned by a non-resident: Troll v. Third Natl. Bank,278 Mo. 74, stock in a Missouri corporation, owned by a non-resident; Naylor's Admr. v. Moffatt, 29 Mo. 126, slaves in Missouri, owned by a non-resident.

We have examined all of the above cases and find that none of them, except the Bunce case, involve the right to collect an inheritance tax, and the holding upon which appellant relies in that case is that a promissory note executed in this State by residents of this State, secured by land in this State, brought by a non-resident owner into this State a few days before his death, and being in this State at the time of his death, was property "within this State" within the meaning of Section 309, Revised Statutes 1909, the first section of the Collateral Inheritance Tax Law then in force but since repealed. We find nothing in any of these decisions which can be construed as fixing or controlling the situs of the corporate stock in this case, as against the express terms of the law now under consideration. In fact, Leavell v. Blades, and State ex rel. v. Lesser, supra, cases involving the direct taxation of property and holding that evidence of debt or shares of stock outside this State, though owned by a resident of this State, are not taxable in this State, were decided on the express ground that our statutes do not require that they be so taxed, and in the former case we said (l.c. 700): "It does not follow that the Legislature might not, if it saw fit, enact a statute making the situs of choses in action, intangible personal property, the same as the domicile of the owner, for taxation purposes."

Turning to the Inheritance Tax Law now in effect, we find that Section 558, Revised Statutes 1919, the first section thereof, is as follows:

"A tax shall be and is hereby imposed upon the transfer of any property, real, personal or mixed or any interest therein or income therefrom, in trust or otherwise, to persons, institutions, associations, or corporations, not hereinafter exempted, in the following cases: When the transfer is by will or by the intestate laws of this State from any person dying possessed of the property while a resident of the State. When the transfer is by will, or intestate law, of property within the State or within the jurisdiction of the State and decedent was a non-resident of the State at the time of his death. When the transfer is made by a resident or by a non-resident when such non-resident's property is within this State, or within its jurisdiction, by deed, grant, bargain, sale or gift made in contemplation of the death of grantor, vendor or donor, or intending to take effect in possession or enjoyment at or after such death. Every transfer by deed, grant, bargain, sale or gift made within two years prior to the death of grantor, vendor or donor, of a material part of his estate or in the nature of a final disposition or distribution thereof without an adequate valuable consideration shall be construed to have been made in contemplation of death within the meaning of this section. Such tax shall be imposed when any person, association, institution or corporation actually comes into the possession and enjoyment of the property, interest therein, or income therefrom, whether the transfer thereof is made before or after the passage of this act:Provided that property which is actually vested in such persons or corporations before this act takes effect shall not be subject to the tax."

Section 589, Revised Statutes 1919, the last section of the same law, is as follows:

"The words `estate' and `property' as used in this article shall be taken to mean the real and personal property or interest therein of the testator, intestate, grantor, bargainor, vendor, or donor passing or transferred to individual legatee, devisees, heirs, next of kin, grantees, donees, vendees, or successors, and shall include all personal property within or without the State. The word `transfer' as used in this article shall be taken to include the passing of property or any interest therein, in possession or enjoyment, present or future, by inheritance, descent, devise, succession, bequest, grant, deed, bargain, sale, gift or appointment in the manner herein described. The word `decedent' as used in this article shall include the testator, intestate, grantor, bargainor, vendor, or donor. The words `contemplation of death' as used in this article shall be taken to include that expectancy of death which actuates the mind of a person on the execution of his will, and in nowise shall said words be limited and restricted to that expectancy of death which actuates the mind of a person in making a gift causa mortis, and it is hereby declared to be the intent and purpose of this article to tax any and all transfers which are made in lieu of or to avoid the passing of the property transferred by testate or intestate laws."

The latter section thus in unmistakable terms includes the intangible or corporate stock here brought in question and fixes its situs for the purpose of this law as the domicile of the resident owner. In so holding we do but follow the plain meaning of the statute and fail not to give it the strict construction that we have held in State v. Rogers, 250 S.W. 576, should be applied to such statutes. Counsel for appellant, however, say that the words "and include all personal property within or without the State" contained in this section, are necessarily limited by the language of Section 558 to personal property which is transferred "by the intestate laws of this State," and that they do not apply to the corporate stock in question unless it be held that such stock, although situated in Nebraska, is transferred by the intestate laws of Missouri.

The above claim merely shifts appellant's burden to the second proposition or contention, that "the title to the stock can be transferred only by administration," in support whereof it is urged that "the transfer of stock in a corporation is governed by the law of the State creating it, and not by the law of a foreign State." The authority cited on this point is Masury v. Arkansas National Bank, 87 F. 381, wherein are cited Black v. Zacharie. 3 How. 483; Lowell on Stocks, 50; Hammond v. Hastings,134 U.S. 401; and Green v. Van Buskirk, 7 Wall. 140. An examination of these cases discloses that they relate to assignments of stock and like transactions between living persons involving the corporation laws of the State, the term "transfer" being used in the restricted sense of writing the new owner's name on the stock records, issuing new certificate, etc. Obviously the term is used in no such narrow sense in the above statutes. In Section 589, supra, the word "transfer" is legislatively defined (italics ours) "to include the passing of property or any interest therein, in possession or enjoyment, present or future, byinheritance, descent, devise, succession, bequest, grant, deed, bargain, sale, gift or appointment in the manner herein described." In this case the decedent's property "passed" by the laws governing descents and distributions, and not by virtue of corporation laws prescribing the mode of transferring stock on the books and issuing new certificates, nor even by virtue of laws governing administration; because, as elsewhere stated in this same section, the "passing" or "transfer" contemplated is "to individual legatees, devisees, heirs, next of kin, grantees, donees, vendees, or successors," and an executor, administrator, or other like agent or trustee who has no beneficial interest in the "property" clearly fails to come within this classification.

Furthermore, an inheritance tax "is not a property tax; but an excise or impost upon the right to transmit property at death; or upon the right to succeed to it from the dead." [Gleason Otis on Inheritance Taxation (4 Ed.) page 247.] In this State we have held without dissent that it is not a tax on property. [State ex rel. McClintock v. Guinotte, 275 Mo. l.c. 321.] We have also variously spoken of it as a tax "on the transmission of property" (Maguire v. University, 271 Mo. l.c. 363), a tax "on the right to succession to the property" (In re Bernero Estate, 271 Mo. l.c. 544), and "a bonus or duty levied upon the right or privilege of the devisee, heir or distributee, for receiving his share" (In re Cupples Estate, 272 Mo. l.c. 470), and it seems clear from a careful reading of the above sections, 558 and 589, that the words "transfer of any property" are used in the sense of "transmission of any property" or "succession to any property," in contradistinction to the uses and meanings suggested by appellant. Hence, contrary to appellant's contention, we hold that the law that operates to transfer the title is the law that determines the transmission, succession, or to whom the property passes, and appellant's third proposition, that "the administration laws of Missouri have no effect or power beyond the limits of Missouri," does not enter into a decision of this case.

Whatever may be said as to the application in this State of the maxim mobilia sequuntur personam in the taxation of property, there is no question but that it applies in the descent and distribution of personal property. The universal application of the rule that distribution of the decedent's personal property is governed by the law of his domicile is thus stated in 5 Ruling Case Law, page 929:

"In the administration and settlement of decedents' estates personal property is distributed by the law of the domicil of the decedent at the time of his death. This rule has been universal for so long a time that it may now be said to be a part of thejust gentium but the law of the domicil of the decedent must yield to that of the actual situs of the property, where rights of creditors resident at the situs are in question."

It has been so declared in our statutory law and judicial decisions. [Sec. 253, R.S. 1919; State ex rel. v. Brinkop, 238 Mo. l.c. 320; Locke v. McPherson, 163 Mo. l.c. 500; Spraddling Keeton v. Pipkin, 15 Mo. l.c. 134; Wyatt v. White, 192 Mo. App. l.c. 557.] The laws of Nebraska have been likewise judicially interpreted. [Minkler v. Woodruff, 12 Neb. 267.]

We are thus led to the conclusion that the trial court correctly found that the intangible property here in question consisting of stock in a Nebraska corporation represented by certificates located in Nebraska, but owned by the decedent whose domicile was in Missouri at the time of his death, passed under the intestate laws of Missouri, and was, therefore, subject to Missouri's inheritance tax.

While we must treat the constitutional questions suggested in appellant's third assignment of errors as untimely raised, they not having been presented at all to the court below, we call attention to the fact that the conclusion we have reached is in harmony with the decision of the Supreme Court of the United States in Frick v. Pennsylvania, 45 Sup. Ct. Rep. 603, much relied upon by appellant and in which similar constitutional questions were passed upon, for that decision, as well as the more recent decision of the same court in Rhode Island Hospital Trust Company v. Doughton, 46 Sup. Ct. Rep. 256, clearly distinguishes tangible and intangible personal property and holds the latter to be "on a different footing from tangible personalty."

For the reasons above stated the judgment of the circuit court is affirmed. All concur, except Gantt, J., not sitting.