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For the purpose of taxation, however, it | vested the right to such possession in said has long been held that personal property Buck. There was no return for taxation of may be separated from its owner, and he said notes, or of the investments representmay be taxed on its account at the place ed by them, either in Ohio or New York where the property is, although it is not during the lifetime of the decedent.” the place of his own domicil, and even if Taking this to be a finding of fact by the he is not a citizen or resident of the supreme court of the state, it is plain that state which imposes the tax. Pullman's the action of the decedent in sending the Palace Car Co. v. Pennsylvania, 141 Ohio notes into the state of Indiana for the U. S. 18, 22, 35 L. ed. 613, 616, 3 In- purpose stated (whether successful or not) ters. Com. Rep. 595, 11 Sup. Ct. Rep. I was improper and unjustifiable. The rec876; Tappan v. Merchants' Nat. Bank, ord does show, however, that the executors 19 Wall. 490, 22 L. ed. 189; People ex subsequently paid the Ohio authorities over rel. Hoyt v. Tax & A. Comrs. 23 N. Y. 224, $40,000 for taxes on the moneys invested in 240. The same rule applies to intangible Ohio. property. Generally speaking, intangible But an attempt to escape proper taxation property in the nature of a debt may be in Ohio does not confer jurisdiction to tax regarded, for the purposes of taxation, as property asserted to be in Indiana which situated at the domicil of the creditor and really lies outside and beyond the jurisdicwithin the jurisdiction of the state where tion of that state. Jurisd: ction of the state he has such domicil. It is property within of Indiana to tax is not conferred or that state. Thus it has been held that a strengthened by reason of the motive which debt owned by a citizen of one state against may have prompted the decedent to send a citizen of another state and evidenced by into the state of Indiana these evidences of the bond of the debtor, secured by a deed debts owing him by residents of Ohio. The of trust or mortgage upon real estate situ- question still remains, Was there any propated in the state where the debtor resides, erty within the jurisdiction of the state of is properly taxed by the state of the resi- Indiana, so as to permit that state to tax dence of the creditor, if the statute of that | it, simply because of the presence of the state so provides, and such tax violates no Ohio notes in that state? It was not the provision of the Federal Constitution. Kirt- value of the paper as a tangible thing, on land v. Hotchkiss, 100 U. S. 491, 498, 25 L. which these promises to pay the debts exed. 558, 562.
isting in Ohio were written, that was taxed Rejecting the fiction of law in regard to by that state. The property really taxed the situs of personal property, including was the debt itself, as each separate note therein choses in action, the courts of In- was taxed at the full amount of the debt diana have asserted jurisdiction by reason named therein or due thereon. And jurisof the statute of that state over these Ohio diction over these debts for the purpose of notes for the purpose of taxation in In- taxation was asserted and exercised solely diana, founded upon the simple fact that by reason of the physical presence in Insuch notes were placed in the latter state diana of the notes themselves, although by the Ohio agent of the decedent under the they were only written evidence of the excircumstances above set forth. The supreme istence of the debts which were in fact court of Indiana refused to accept the tes- thereby taxed. timony of the agents that the Ohio notes A distinction has been sometimes taken were sent to Lafayette merely for safe between bonds and other specialty debts keeping, and for clerical convenience, and belonging to the deceased, on the one hand, said that “the court below was authorized and simple contract debts on the other, for to make the opposite deduction from the the purpose of probate jurisdiction, and the uniform course of the business in respect to probate court where the bonds are found the keeping of said notes and mortgages has been held to have jurisdiction to grant and from the evidence that decedent gave probate, while, in the other class of debts the direction which established the practice (including promissory notes), jurisdiction that was pursued in that particular. More has attached to the probate court where the than that, the evidence clearly warranted debtor resided at the death of the creditor. the conclusion that Buck was vested with a 1 Wms. Exrs. 6th Am. from 7th English ed., control of said notes and securities for the bottom paging 288, 290, note [li]; Wyman purpose of enabling decedent to escape tax. v. Halstead (Wyman v. United States) 109 ation in Ohio. We must, therefore, con-U. S. 654, 27 L. ed. 1068, 3 Sup. Ct. Rep. clude, in support of the general finding, that 417. See also Beers v. Shannon, 73 N. Y. the court below found that in conducting 292, 299; Owen v. Miller, 10 Ohio St. 136, the business of the Ohio agency the dece- 75 Am. Dec. 502. dent separated from said business the pos- Under such rule, the debts here in quessession of said notes and mortgages and 'tion were not property within the state of Indiana, nor were the promissory notes | in New York, the domicil of the company) themselves, which were only evidence of except when they became due was regarded such debts. The rule giving jurisdiction as unimportant. The law, it was said, rewhere the specialty may be found has no garded the place of their origin as their application to a promissory note. Assum- true home, to which they would return to ing such a rule, the case here is not covered be paid, and their temporary absence, howby it.
ever long continued, was left out of acQuestions of the validity of state taxation count. with reference to the Federal Constitution The prior cases of New Orleans v. Stem, have become quite frequent in this court pel, 175 U. S. 309, 44 L. ed. 174, 20 Sup. Ct. within the last few years. The case of Rep. 110, and State Assessors v. Comptoir Metropolitan L. Ins. Co. v. New Orleans, National D’Escompte, 191 U. S. 388, 48 L. 205 U. S. 395, 51 L. ed. 853, 27 Sup. Ct. Rep. ed. 232, 24 Sup. Ct. Rep. 109, were also cit499, is the latest. The question there was ed. In the first there was a tax on credits, in relation to the validity of certain taxes evidenced by notes (secured by mortgages assessed in the city of New Orleans against on real estate in New Orleans) which the the Metropolitan Life Insurance Company owner, a nonresident, who had inherited by reason of the company doing business in them, left in Louisiana in the possession of lending money to the holders of its policies an agent, who collected the principal and in New Orleans. The domicil of the com- interest as they became due. The capital pany was in the city of New York, and the of the owner was thus invested in the state, evidences of the credits, in the form of and was thereby subject to taxation there, notes, were kept most of the time in New and the notes did not alter the nature of York, being sent to New Orleans when due. the debt, but were merely evidence of it. The tax was, under the laws of the state of In the latter case a foreign banking comLouisiana, levied on the “credits, money pany did business in New Orleans, and loaned, bills receivable," etc., of the plaintiff through an agent lent money which was in error, and its amount was ascertained by evidenced by checks drawn upon the agent, computing the sum of the face value of treated as overdrafts and secured by colall the notes held by the company in New lateral, the checks and collateral remaining Orleans at the time of the assessment. The in the hands of the agent until the transacassessment was made under an act which tions were closed. The credits thus eviprovided that "bills receivable, obligations, denced were held taxable in Louisiana. The or credits arising from the business done corporation was held to be doing business in this state," shall be assessable at the and had capital employed in the city
of business domicil of the nonresident, the as- New Orleans, to the extent of the assesssessment being made in such a way under ment made upon it therein. the statute as would "represent in their In Bristol v. Washington County, 177 U. aggregate a fair average on the capital, S. 133, 44 L. ed. 701, 20 Sup. Ct. Rep. 585, both cash and credits, employed in the busi- the assessment was upheld because it apness of the party or parties to be assessed." peared that the person assessed was doing The tax was sustained because, as is stated business in Minnesota through an agent, in in the opinion of the court, which was de- lending money in that state, which was livered by Mr. Justice Moody, “the insur- secured by mortgages on real property ance company chose to enter into the busi- therein. The amount of money thus inness of lending money within the state of vested in that state was held to be propLouisiana, and employed a local agent to erly taxable therein. conduct that business. It was conducted In Savings & L. Soc. v. Multnomah under the laws of the state. The state County, 169 U. S. 421, 42 L. ed. 803, 18 Sup. undertook to tax the capital employed in Ct. Rep. 392, the assessment was upon the the business precisely as it taxed the capi- real estate mortgaged, the interest of the tal of its own citizens in like situation. mortgagee therein being taxed to him and For the purpose of arriving at the amount the rest to the mortgagor, and it was held of capital actually employed, it caused the by this court that the fact that the mortcredits arising out of the business to be as-gage was owned by a citizen of another sessed. We think the state had the power state, and in his possession outside of the to do this, and that the foreigner doing state of Oregon, where the real estate was business cannot escape taxation upon his situated, did not violate the 14th Amendcapital by removing temporarily from the ment. It was stated that “the state may state evidences of credits in the form of tax real estate mortgaged, as it may all notes. Under such circumstances, they other property within its jurisdiction, at its have a taxable situs in the state of their full value. It may do this, either by taxing origin.” The temporary absence of the notes the whole to the mortgagor, or by taxing given for the loans from the state (being' to the mortgagee the interest therein represented by the mortgage, and to the mort-, forced it would not be to the courts of Ingagor the remaining interest in the land. diana that the owner would resort. He And it may, for the purpose of taxation, would have to go to Ohio to find the debtor either treat the mortgage debt as personal as well as the lands mortgaged as security property, to be taxed like other choses in for the payment of the notes. It is true action, to the creditor at his domicil, or that if the notes were stolen while in Intreat the mortgagee's interest in the land diana, and they were therein a subject of as real estate, to be taxed to him, like larceny, the Indiana courts would have to other real property, at its situs.” Under be resorted to for the punishment of the the statute of Oregon the assessment was thieves. That would be in vindication of made against the mortgagee upon his in the general criminal justice of the state. terest in the land as real estate.
This consideration, however, is not near There are no cases in this court where an enough to the question involved to cause assessment such as the one before us has us to change our views of the law in rebeen involved. We have not had a case gard to the taxation of property, and make where neither the party assessed nor the that property within the state which we debtor was a resident of or present in the think is clearly outside it. state where the tax was imposed, and where Although public securities, consisting of no business was done therein by the owner state bonds and bonds of municipal bodies, of the notes or his agent relating in any and circulating notes of banking instituway to the capital evidenced by the notes tions, have sometimes been treated as propassessed for taxation. We cannot assent erty in the place where they were found, to the doctrine that the mere presence of though removed from the domicil of the evidences of debt, such as these notes, un- owner (State Tax on Foreign-held Bonds, der the circumstances already stated, 15 Wall. 300, 324, 21 L. ed. 179, 188), it has amounts to the presence of property within not been held in this court that simple the state for taxation. That promissory contract debts, though evidenced by promnotes may be the subject of larceny, as issory notes, can, under the facts herein stated in 48 N. Y., cited below, does not stated, be treated as property, and taxed make the debts evidenced by them property in the state where the notes may be found. liable to taxation within the state, where As is said in the above-cited case (at there is no other fact than the presence of page 320, L. ed. at page 187): “All the the notes upon which to base the claim. property there can be in the nature of
In People ex rel. Westbrook v. Ogdens- things in debts of corporations belongs to burgh, 48 N. Y. 390, it was held that money the creditors, to whom they are payable, due upon a contract for the sale of land and follows their domicil, wherever that was personal property, and that where such may be. Their debts can have no locality contract belonging to a nonresident was in separate from the parties to whom they the hands of a resident agent, it might, for are due. This principle might be stated in the purposes of municipal taxation, be as many different ways, and supported by cisessed to the agent and taxed. In the opin- tations from numerous adjudications, but ion Judge Earl said: “The debts due upon no number of authorities and no forms of these contracts are personal estate, the expressions could add anything to its obsame as if they were due upon notes or vious truth, which is recognized upon its bonds; and such personal estate may be simple statement.” said to exist where the obligations for pay. The cases cited in Metropolitan L. Ins. ment are held.” The contracts spoken of Co. Case, supra, show that this rule is enin that case were contracts for the sale of larged to the extent of holding that capital land by a nonresident owner to persons evidenced by written instruments, invested within the county where the lands were in a state, may be taxed by the authorities situated. The debtors resided within the of the state, although their owner is a nonstate, and the agent of the nonresident for resident and such evidences of debt are temthe sale of the land resided in the state porarily outside of the state when the as. and had possession of the contracts. A sessment is made. Although the language different case as to its facts from the one of the opinion in the case of State Tax on before us.
Foreign-held Bonds, supra, has been someIn People ex rel. Jefferson v. Smith, 88 what restricted so far as regards the charN. Y. 576, jurisdiction to tax in New York acter of the interest of the mortgagee in was denied under the statute of that state, the land mortgaged (Savings & L. Soc. v. because the personal estate was not within Multnomah County, 169 U. S. 421, 428, 42 the state, although the same principle (page L. ed. 803, 805, 18 Sup. Ct. Rep. 392), the 581) as contained in 48 N. Y., supra, was principle upon which the case itself was deasserted.
cided has not been otherwise shaken by the If payment of these notes had to be en- ' later cases (New Orleans v. Stempel, 175 U.S. 309, 319, 320, 44 L. ed. 174, 180, 20 Sup. power of attorney under which the agent Ct. Rep. 110; Blackstone v. Miller, 188 Ū. held the "Ohio notes” not only authorized S. 189, 206, 47 L. ed. 439, 445, 23 Sup. Ct. him to enter satisfaction of them when paid, Rep. 277). In the Stempel Case, supra, the but gave him complete control and dominion notes, as we have said, represented the cap- over them, with power of sale. And while ital of the owner invested in the state, and it does not clearly appear that the proceeds the capital was taxed, although the owner of the notes in question were reinvested by was a nonresident.
the agent in Indiana, it does appear that Cases arising under collateral inheritance after 1886 large sums of money were sent tax or succession tax acts have been cited from Cincinnati to Lafayette, and were inas affording foundation for the right to tax vested by Nash's agent in Indiana. Furas herein asserted. The foundation upon thermore, in the opinion it is said that the which such acts rest is different from that executors, subsequently to the death of which exists where the assessment is levied Nash, paid over $40,000 of taxes on money upon property. The succession or inherit- invested in Ohio. It does appear that after ance tax is not a tax on property, as has the death of Nash, under the Ohio law the been frequently held by this court (Knowl. auditor of Hamilton county instituted a ton v. Moore, 178 U. S. 41, 44 L. ed. 969, 20 proceeding for the collection of five years Sup. Ct. Rep. 747, and Blackstone v. Miller, (of the thirteen here involved) of back taxes 188 U. S. 189, 47 L. ed. 439, 23 Sup. Ct. Rep. upon some of the notes representing the 277), and therefore the decisions arising un-Ohio investments, and, rather than litigate, der such inheritance tax cases are not in a settlement was made by the executors point.
for this five years' claim in the sum of $40,Our decision in this case has no tendency 000. Whether that was for the notes here to aid the owner of taxable property in in question the record does not disclose. As any effort to avoid or evade proper and le. the Ohio agent testified, only a part of the gitimate taxation. The presence of the Ohio notes were sent to Indiana, and others notes in Indiana formed no bar to the right, in large amounts were kept in Ohio. We if it otherwise existed, of taxing the debts know of no statute in Ohio which would evidenced by the notes in Ohio. It does, tax the notes permanently kept in Indiana, however, tend to prevent the taxation in and none is pointed out. The supreme one state of property in the shape of debts court of Indiana in this case reached the not existing there, and which, if so taxed, conclusion that these particular notes were would make double taxation almost sure, not taxable in Ohio. Of course, the settlewhich is certainly not to be desired, and ment of the claim could not affect the legal ought, wherever possible, to be prevented. proposition here involved, but for accuracy
For the reason that, as the assessment of statement it must not be regarded that in this case was made upon property which equitably the claim for taxes upon these was never within the jurisdiction of the notes has been satisfied. On the contrary, state of Indiana, the state had no power to this record discloses that, by the scheme tax it, and the enforcement of such a tax adopted, more than three quarters of a milwould be the taking of property without lion of dollars in capital invested in notes and due process of law.
mortgages successfully evaded taxes during The judgment of the Supreme Court of Nash's lifetime in New York, where he was Indiana is reversed and the case remanded domiciled, and in Ohio and Indiana, where for further proceedings not inconsistent with his agents were loaning his money for him, the opinion of this court. Reversed. and where his notes and mortgages, the re
sults of such loans, were held for him. Mr. Justice Day, dissenting:
Accepting the decision of the supreme I am unable to concur in the opinion and court of the state that a statute of the judgment of the court in this case, and be- state has undertaken to tax these notes, lieve that its importance and far-reaching it is now held that the Constitution of the effect warrant a statement of the grounds United States prevents such taxation of upon which I differ.
notes and mortgages held under the protecBefore stating the view which it seems to tion and within the power of the state by me should be controlling, I believe that the the agent of a nonresident owner, although statement of facts, as outlined by the learn- such agent holds the securities in an office ed Justice speaking for the court, should be belonging to the owner, in a safe provided somewhat amplified, with a view to a more by him, with a power of attorney which gives complete showing of the case.
him full dominion over them, and, for the The office in Lafayette, Indiana, was the convenience of the owner, keeps a book in office of Nash, for which he paid the rent. which transactions concerning them are reThe safes in which the notes were kept in
corded at the instance of the owner, and this office were the safes of Nash, and the sends them out for collection. These notes
were sent beyond the borders of the state states referred to in these authorities as of Indiana only for collection, or for the having statutes warranting such levy and few days when they were supposed to be sale are California, Indiana, Kentucky, New liable for taxation, and, when such danger York, Tennessee, Iowa, and Louisiana. was thought to be past, returned to the Brown v. Anderson, 4 Mart. N. S. 416, afagent in Indiana.
firmed the rightfulness of such a levy and I agree that a debt intangible in form can- sale. In Fluker v. Bullard, 2 La. Ann. 338, not acquire a situs for the purpose of taxa- it was held that if a note was not taken tion, but I submit that when a debt takes into the actual possession of the sheriff a the shape of note and mortgage it may, if sale by him on an execution conveyed no the state in the exercise of its taxing pow. title on the purchaser, the court saying: er so wills, acquire a situs separate from 'In the case of Simpson v. Allain it was the domicil of the owner under the circum- held that, in order to make a valid seizure stances shown in this case. I concede that of tangible property, it is necessary that the precise point here involved has not been the sheriff should take the property levied decided in previous cases in this court, but upon into actual possession, 7 Rob. (La.) in my view the principles declared in this 504. In the case of Goubeau v. New Orleans court were followed in the supreme court & N. R. Co. the same doctrine is still more of Indiana and require the affirmance of its distinctly announced. The court there says: judgment.
"From all the different provisions of our This court in a series of cases has held laws above referred to, can it be controthat notes, bonds, and mortgages may ac
verted that, in order to have them carried quire a situs at the place where they are
into effect, the sheriff must necessarily take held. Some of the cases are: New Orleans the property seized into his possession ? v. Stempel, 175 Ů. S. 309, 44 L. ed. 174, 20 This is the essence of the seizure. It cannot Sup. .Ct. Rep. 110; Bristol v. Washington exist without such possession." 6 Rob. (La.) County, 177 U. S. 133, 44 L. ed. 701, 20 Sup. 348. It is clear, under these authorities, Ct. Rep. 585; Blackstone v. Miller, 188 Ū. that the sheriff effected no seizure of the 8. 189, 47 L. ed. 439, 23 Sup. Ct. Rep. 277; note in controversy, and consequently his State Assessors v. Comptoir National D’Es subsequent adjudication of it conferred no compte, 191 U. S. 388, 403, 48 L. ed. 232, title on Bailey.' 238, 24 Sup. Ct. Rep. 109; Carstairs v. Coch- “The same doctrine was reaffirmed in ran, 193 U. S. 10, 48 L. ed. 596, 24 Sup. Ct. Stockton v. Stanbrough, 3 La. Ann. 390. Rep. 318; Scottish Union & Nat. Ins. Co. v. Now, if property can have such a situs withBowland, 196 U. S. 611, 49 L. ed. 619, 25 in the state as to be subject to seizure and Sup. Ct. Rep. 345.
sale on execution, it would seem to follow It would unnecessarily extend this dis- that the state has power to establish a like sent to analyze these cases. Brief reference situs within the state for purposes of taxto some of them, in my judgment, shows ation. It has also been held that a note that the principles therein declared, when may be made the subject of seizure and deextended to this case, would warrant the livery in a replevin suit. Graff v. Shannon, state, if it so chose in exerting its taxing 7 Iowa, 508; Smith v. Eals, 81 Iowa, 235, power, to reach notes and mortgages held 25 Am. St. Rep. 486, 46 N. W. 1110; Pritchwithin its jurisdiction under the circum- ard v. Norwood, 155 Mass. 539, 30 N. E. stances which we have detailed.
80. In New Orleans v. Stempel, supra, a tax
"It is well settled that bank bills and on credits evidenced by notes and secured municipal bonds are in such a concrete tanby mortgages was upheld, where the owner gible form that they are subject to taxation left them in Louisiana in the possession of where found, irrespective of the domicil of an agent, who collected the same as they the owner, are subject to levy and sale on fell due. There was no fact of investment execution, and to seizure and delivery unand reinvestment of capital in the case, and der replevin; and yet they are but promises the court, speaking through Mr. Justice to pay,-evidences of existing indebtedness. Brewer, said:
Notes and mortgages are of the same nature; “This matter of situs may be regarded and, while they may not have become so genin another aspect. In the absence of staterally recognized as tangible personal propute, bills and notes are treated as choses in erty, yet they have such a concrete form that action, and are not subject to levy and sale we see no reason why a state may not deon execution, but, by the statutes of many clare that, if found within its limits, they states, they are made so subject to seizure shall be subject to taxation." and sale, as any tangible personal property. In commenting on this case and State 1 Freeman, Executions, § 112; 4 Am. & Assessors v. Comptoir National D’Escompte, Eng. Enc. Law, 2d ed. p. 282; 11 Am. & 191 U. S. 388, 48 L. ed. 232, 24 Sup. Ct. Eng. Enc. Law, 2d ed. p. 623. Among the 'Rep. 109, Mr. Justice Moody, speaking for