State v. Bullen

EebwiN, J. We shall first consider the appeal on the part of the Bullen heirs. Counsel say in their brief that there is — 518 — but one question for determination by tbis court, namely: “Can tbe state of Wisconsin tax a contract made by one of its residents wben in a foreign state, whereby be transfers property wbicb is tben in tbe foreign state and wbicb never bas been in tbe state of Wisconsin, even though constructively tbe transfer was 'intended to take effect in possession or enjoyment at or after tbe death of tbe transferor V ” It is argued that tbe tax is not a tax of property, but an excise tax imposed on tbe transfer, and, tbe transfer being made in a foreign state of property within that state, tbis state cannot tax such property held by the Northern Trust Company. It is said that tbe tax is “not a tax on tbe person who transmits, or the person who receives, but it is a tax on tbe right of transmission.”' Tbis question was considered and discussed by tbis court in Nunnemacher v. State, 129 Wis. 190, 108 N. W. 627, and the conclusion arrived at, after a review of tbe authorities, that inheritance taxes are not taxes upon property, “but upon tbe right to receive property.” And in Beals v. State, 139 Wis. 544 (121 N. W. 347), at page 552, tbis court, referring to' tbe Nunnemacher Case, said: “Inheritance taxation was held to be constitutional in the Nunnemacher Case on tbe ground that it is excise taxation levied on tbe transfer of property and not on tbe property itself. . . .” And in summing up^ tbe points decided tbe court said: “Tbe inheritance tax levied by cb. 44, Laws of 1903, is not a tax upon property or property rights in any sense, but purely an excise tax levied upon tbe 'transfer’ or transaction, and merely measured in amount by tbe amount of property transferred.” Again, in State v. Pabst, 139 Wis. 561, 121 N. W. 351, tbe rule laid down in tbe Nunnemacher and Beals Gases was referred to and approved. Tbe tax, therefore, under tbe decisions of tbis and other courts is a tax upon tbe transfer, transaction, or right hi receive property. Nunnemacher v. State, supra; Beals v. State, supra. Tbe theory of an inheritance tax is that it is not one on property, but upon tbe right of succession. 27 — 519 — Am. & Eng. Ency. of Law (2d ed.) 338; State v. Pabst, supra. But it is strenuously argued by counsel for the beixs that tbe property taxed being in tbe state of Illinois, and tbe transr fer from Bullen to tbe Northern Trust Company having been made in the state of Illinois and outside of tbe state of Wisconsin, tbe Wisconsin inheritance tax law does not reach such property. This contention involves tbe question of tbe situs of tbe property of Bullen transferred to tbe trust company and the application of our inheritance law to such situation. The following provisions of tbe inheritance law of this state— sec. 1081 — 1, Stats. (Supp. 1906: Laws of 1903, cb. 44, sec. 1; Laws of 1903, cb. 249, sec. 1; Laws of 1905, cb. 96, sec. 1) — are pertinent to tbe present inquiry: “A tax shall be and is hereby imposed upon any transfer of property, real, personal or mixed, or any interest therein, or income therefrom in trust or otherwise, to any person, association or corporation, except county, town or municipal corporations within tbe state, for strictly county, town or municipal purposes, and corporations of this state organized under its laws solely for religious, charitable or educational purposes, which shall use tbe property so transferred exclusively for tbe purposes of their organization, within tbe state, in the following cases: “(1) When tbe transfer is by will or by the intestate laws of this state from any person dying possessed of tbe property while a resident of the state. “(2) When a transfer is by will or intestate law, of property within tbe state or within its jurisdiction and tbe decedent was a nonresident of tbe state at the time of bis death. “(3) When tbe transfer is of property made by a resident or by a nonresident when such nonresident’s property is within this state, or within its jurisdiction, by deed, grant, bargain, sale or gift, made in contemplation of tbe death of the grantor, vendor or donor, or intended to take effect in possession or enjoyment at or after such death. “(4) Such tax shall be imposed when any such person or corporation becomes beneficially entitled, in possession or ex — 520 — pectancy, to any property or tbe income thereof, by any such transfer whether made before or after the passage of this act; provided, that property or estates which have vested in such persons or corporations before this act shall take effect, shall not be subject to a tax; and provided further, that contingent interests created by the will of any person who died prior to the passage of this act shall not be taxed.” This statute was borrowed from' New York; therefore the judicial construction given it there is significant in interpreting it here. Draper v. Emerson, 22 Wis. 147; Westcott v. Miller, 42 Wis. 454; Dutcher v. Dutcher, 39 Wis. 651; Pomeroy v. Pomeroy, 93 Wis. 262, 67 N. W. 430. “It is a settled rule in the construction of statutes, that where a statute has received a judicial construction in another state, and is then adopted, it is taken with the construction which has been so given it.” Draper v. Emerson, supra. Prior to its adoption here the statute received judicial construction in New York, and it was held that in respect to personal property not within the state at the time of the resident decedent’s death the court will apply the maxim Mobilia se-quuntur personam. Estate of Swift, 137 N. Y. 77, 32 N. E. 1096; Estate of Cornell, 170 N. Y. 423, 63 N. E. 445. The effect of this rule is to make the legal situs of the property at the domicile of the decedent. As we have seen, Mr. Bullen reserved the right to direct and control the distribution of the trust property and to revoke the trust at any time during his life, and received during his lifetime the entire net income from the trust estate held by the Northern Trust Company. The trust agreement contains the following clause: “Fifth. I, the donor, expressly reserve the right to direct and control the disposition of the said trust property and estate, to revoke and vacate this trust at any time during my life, to enter into and upon and take possession of the same, or any part thereof, to require a reconveyance to me of the said trust property, or any part thereof, and to dispose of it as I may see fit. During my lifetime the principal and in — 521 — ■come shall be used for such beneficiaries and in such manner as I may from time to time appoint, and in default of any appointment during my lifetime, and, at all events, after my ■death, the same income and the said principal shall be applied, paid over or held as herein provided.” We think under the authorities and the established facts in this case that the situs of the property covered by the trust agreement was in the state of Wisconsin, where Bullen lived and died, and was subject to the Wisconsin inheritance tax. Estate of Swift, supra; Estate of Cornell, supra; In re Corning’s Estate, 3 Misc. 160, 23 N. Y. Supp. 285; Frothingham v. Shaw, 175 Mass. 59, 55 N. E. 623; Ford v. Ford, 70 Wis. 19, 33 N. W. 188. It is true there is some conflict of authority on the point. Counsel for the heirs in their briefs cite us to In re Joyslin’s Estate, 76 Vt. 88, 56 Atl. 281, which appears to be out of harmony with the rule laid down in New York and Massachusetts. We feel constrained to hold to the New York and Massachusetts rule. In Frothingham v. Shaw, 175 Mass. 59, 55 N. E. 623, the court holds the general rule to be that personal property for the purpose of taxation has its situs at the domicile of the owner; and although this rule leads to double taxation, that has not been accounted a sufficient objection to taxation of personal property to the owner during his life at the place of his domicile, nor sufficient objection to the imposition of succession taxes after his death. In Estate of Swift, supra, there is a full discussion of the subject, and the court concludes that as to personal property of a resident decedent, wheresoever situated, whether within or without the state, it is subject to the tax imposed by the act. In Estate of Cornell, supra, it was held that a gift of securities, under an agreement that the donor should have during his life such part of the net income as he desired, but the donee to have possession and management of the securities, makes the donee the holder in trust until the death of the — 522 — donor, and such property is, therefore, taxable under the Laws of 1896, ch. 908, § 220, snbd. 3, which provides: “When the transfer is of property made by a resident or by a nonresident, when such nonresident’s property is within this-state, by deed, grant, bargain, sale or gift made in contemplation of the death of the grantor, vendor or donor, or intended to take effect, in possession or enjoyment, at or after such death. Such tax shall also be imposed when any such person or corporation becomes beneficially entitled, in possession or expectancy, to any property or the income thereof by any such transfer, whether made before or after the passage of this act. . . .” See also Estate of Brandreth, 169 N. Y. 437, 62 N. E. 563. In Estate of Keeney, 194 N. Y. 281, 87 N. E. 428, under the transfer tax law before referred to, the court said (page 287) : “It is a matter of common knowledge that for this purpose trusts or other conveyances are made whereby the grantor reserves to himself the beneficial enjoyment of his estate during life. Were it not for the provision of the statute which is challenged, it is clear that in many cases the estate, on the-death of the grantor, would pass free from tax to the same persons who would take it had the grantor made a will or died intestate. It is true that an ingenious mind may devise other-means of avoiding an inheritance tax, but the one commonly used is a transfer with reservation of a life estate. We think this fact justified the legislature in singling out this class of transfers as subject to a special tax. “It is also urged that the trust property was at the time of the intestate’s death in another state with the legal title in the trustee. This does not affect the liability of the transfer to taxation. The liability in this case accrued at the time of transfer, no matter when imposed.” In the instant case Bullen reserved and enjoyed a life estate in the property transferred to the Northern Trust Company. Sec. 2443, Stats. (1898), provides that the jurisdiction of the county court extends to estates of all persons deceased who were at the time of their deaths inhabitants of or residents of the same county, or who shall die without the — 523 — state having any estate within such county to be administered. And by ch. 44, Laws of 1903 (the inheritance tax law), such courts are given authority to determine the inheritance tax which shall be paid by the estate of decedent. And in see. 1081 — 24, Stats. (Supp. 1906: Laws of 1903, ch. 44,, sec. 23), the words “estate” and “property” are defined to mean “the real and personal property or interest therein of’ the testator, intestate, grantor, bargainor, vendor or donor-passing or transferred to individual legatees, devisees, heirs,, next of kin, grantees, donees, vendees or successors, and shall include all personal property within or without the state.” We think it quite clear, upon the established facts, that the-transfer was made “in contemplation of death” within the-meaning of the law (State v. Pabst, 139 Wis. 561, 121 N. W. 351), and was also “intended to take effect in possession or enjoyment at or after such death.” Sec. 1081 — 1, subd. 3,. Stats. (Supp. 1906: Laws of 1903, ch. 44, sec. 1) ; Estate of Green, 153 N. Y. 223; Estate of Brandreth, supra; Estate of Cornell, 170 N. Y. 423, 63 N. E. 445; Estate of Keeney, 194 N. Y. 281, 87 N. E. 428. We conclude that the property covered by the trust agreement was-subject to the inheritance-tax. The only error urged on the state’s appeal is, that the-$25,000 insurance policy assigned to the trust company should have been taxed. It appears that this policy was. made payable to Mrs. Bullen as beneficiary, and no right reserved in it or otherwise to change the beneficiary. It was. assigned to the trust company, but it does not appear that Mrs. Bullen relinquished her rights therein; therefore this-property remained the property of Mrs. Bullen and was not a part of Mr. Bullen’s estate. The court below, therefore, was-right in refusing to tax it. Some other points are made on both appeals, but from the-view we take of the case consideration of them is unnecessary. By the Court. — The judgment of the court below is affirmed on both appeals.