Where a deposit made by a citizen of Illinois in a trust company
in the City of New York remains there fourteen months, the property
is delayed within the jurisdiction of New York long enough to
justify the finding of the state court that it was not in
in such a sense as to withdraw it from the power of
the state if it were otherwise taxable, even though the depositor
intended to withdraw the funds for investment. Under the laws of
New York, such deposit is subject to the transfer tax,
notwithstanding that the whole succession had been taxed in
Illinois, including this deposit.
The fact that two states, dealing each with its own law of
succession, both of which have to be invoked by the person claiming
rights, have taxed the right which they respectively confer gives
no ground for complaint on constitutional grounds.
Power over the person of the debtor confers jurisdiction, and a
state has an equal right to impose a succession tax on debts owed
by its citizens as upon tangible assets found within the state at
the time of the death. Where a state law imposing a tax upon
transfer is in force before the funds come within the state, the
tax does not impair the obligation of any contract, deny full faith
or credit to a judgment taxing the inheritance in another state, or
deprive the executrix and legatees of the decedent of any privilege
or immunity as citizens of the taxing state, nor is it contrary to
the Fourteenth Amendment.
The case is stated in the opinion of the Court.
Page 188 U. S. 202
MR. JUSTICE HOLMES delivered the opinion of the Court.
This is a writ of error to the Surrogate's Court of the County
of New York. It is brought to review a decree of the court,
sustained by the appellate division of the supreme court, 69
App.Div. 127, and by the Court of Appeals, 171 N.Y. 682, levying a
tax on the transfer by will of certain property of Timothy B.
Blackstone, the testator, who died domiciled in Illinois. The
property consisted of a debt of $10,692.24, due to the deceased by
a firm, and of the net sum of $4,843,456.72, held on a deposit
account by the United States Trust Company of New York. The
objection was taken seasonably upon the record that the transfer of
this property could not be taxed in New York consistently with the
Constitution of the United States.
The deposit in question represented the proceeds of railroad
stock sold to a syndicate and handed to the trust company, which,
by arrangement with the testator, held the proceeds subject to his
order, paying interest in the meantime. Five days' notice of
withdrawal was required, and if a draft was made upon the company,
it gave its check upon one of its banks
Page 188 U. S. 203
of deposit. The fund had been held in this way from March 31,
1899, until the testator's death on May 26, 1900. It is probable,
of course, that he did not intend to leave the fund there forever,
and that he was looking out for investments, but he had not found
them when he died. The tax is levied under a statute imposing a
"upon the transfer of any property, real or personal. . . . 2.
When the transfer is by will or intestate law, of property within
the state, and the decedent was a nonresident of the state at the
time of his death."
Laws of 1896, c. 908, § 220, amended, Laws of 1897, c. 284; 3
Birdseye's Stat. ed ed. 1901, p. 3592. The whole succession has
been taxed in Illinois, the New York deposit being included in the
appraisal of the estate. It is objected to the New York tax that
the property was not within the state, and that the courts of New
York had no jurisdiction; that, if the property was within the
state it was only transitorily there, Hays v.
Pacific Mail Steamship Co.,
17 How. 596,
58 U. S.
-600, that the tax impairs the obligation of
contracts, that it denies full faith and credit to the judgment
taxing the inheritance in Illinois, that it deprives the executrix
and legatees of privileges and immunities of citizens of the State
of New York, and that it is contrary to the Fourteenth
In view of the state decisions, it must be assumed that the New
York statute is intended to reach the transfer of this property if
it can be reached. New Orleans v. Stempel, 175 U.
, 175 U. S. 316
Morley v. Lake Shore & Michigan Southern Ry. Co.,
146 U. S. 162
146 U. S. 166
We also must take it to have been found that the property was not
in such a sense as to withdraw it from the
power of the state, if otherwise the right to tax the transfer
belonged to the state. The property was delayed within the
jurisdiction of New York an indefinite time, which had lasted for
more than a year, so that this finding at least was justified.
Kelley v. Rhoads, ante,
p. 188 U. S. 1
Diamond Match Co. v. Village of Ontonagon, ante,
188 U. S. 84
present term. Both parties agree with the plain words of the law
that the tax is a tax upon the transfer, not upon the deposit, and
we need spend no time upon that. Therefore the naked question is
whether the state has a right to tax the transfer of such deposit
Page 188 U. S. 204
The answer is somewhat obscured by the superficial fact that New
York, like most other states, recognizes the law of the domicil as
the law determining the right of universal succession. The domicil,
naturally, must control a succession of that kind. Universal
succession is the artificial continuance of the person of a
deceased by an executor, heir, or the like, so far as succession to
rights and obligations is concerned. It is a fiction, the
historical origin of which is familiar to scholars, and it is this
fiction that gives whatever meaning it has to the saying
mobilia sequuntur personam.
But, being a fiction, it is
not allowed to obscure the facts when the facts become important.
To a considerable although more or less varying extent, the
succession determined by the law of the domicil is recognized in
other jurisdictions. But it hardly needs illustration to show that
the recognition is limited by the policy of the local law.
Ancillary administrators pay the local debts before turning over
the residue to be distributed, or distributing it themselves,
according to the rules of the domicil. The title of the principal
administrator, or of a foreign assignee in bankruptcy -- another
type of universal succession -- is admitted in but a limited way or
not at all. See Crapo v.
16 Wall. 610; Chipman v. Manufacturers'
156 Mass. 147-149, 30 N.E. 610.
To come closer to the point, no one doubts that succession to a
tangible chattel may be taxed wherever the property is found, and
nonetheless that the law of the situs accepts its rules of
succession from the law of the domicil, or that, by the law of the
domicil, the chattel is part of a universitas,
taken into account again in the succession tax there. Eidman v.
Martinez, 184 U. S. 578
184 U. S.
-587, 184 U. S. 592
See Mager v.
8 How. 490, 49 U. S. 493
Coe v. Errol, 116 U. S. 517
116 U. S. 524
Pullman's Palace Car Co. v. Pennsylvania, 141 U. S.
, 141 U. S. 22
Magoun v. Illinois Trust & Savings Bank, 170 U.
; New Orleans v. Stempel, 175 U.
; Bristol v. Washington County,
177 U. S. 133
for state decisions, In re Romaine,
127 N.Y. 80;
Callahan v. Woodbridge,
171 Mass. 595; Greves v.
173 Mass. 205; Allen v. National State Bank,
No doubt this power on the part of two states to tax on
Page 188 U. S. 205
and more or less inconsistent principles leads some hardship. It
may be regretted also that one and the same state should be seen
taxing, on the one hand, according to the fact of power, and, on
the other at the same time, according to the fiction that, in
successions after death, mobilia sequuntur personam
domicil governs the whole. But these inconsistencies infringe no
rule of constitutional law. Coe v. Errol, 116 U.
, 116 U. S. 524
Knowlton v. Moore, 178 U. S. 41
The question, then, is narrowed to whether a distinction is to
be taken between tangible chattels and the deposit in this case.
There is no doubt that courts in New York and elsewhere have been
loath to recognize a distinction for taxing purposes between what
commonly is called money in the bank and actual coin in the pocket.
The practical similarity more or less has obliterated the legal
difference. In re Houdayer,
150 N.Y. 37; New Orleans
v. Stempel, 175 U. S. 309
175 U. S. 316
City National Bank v. Charles Baker Co.,
180 Mass. 40, 42.
In view of these cases and the decision in the present case, which
followed them, a not very successful attempt was made to show that,
by reason of the facts which we have mentioned and others, the
deposit here was unlike an ordinary deposit in a bank. We shall not
stop to discuss this aspect of the case, because we prefer to
decide it upon a broader view.
If the transfer of the deposit necessarily depends upon and
involves the law of New York for its exercise, or, in other words,
if the transfer is subject to the power of the State of New York,
then New York may subject the transfer to a tax. United States
v. Perkins, 163 U. S. 625
163 U. S.
-629; McCulloch v.
4 Wheat. 316, 17 U. S. 429
But it is plain that the transfer does depend upon the law of New
York not because of any theoretical speculation concerning the
whereabouts of the debt, but because of the practical fact of its
power over the person of the debtor. The principle has been
recognized by this Court with regard to garnishments of a domestic
debtor of an absent defendant. Chicago, Rock Island &
Pacific Ry. Co. v. Sturm, 174 U. S. 710
See Wyman v. Halstead, 109 U. S. 654
What gives the debt validity? Nothing but the fact that the law of
the place where the debtor is will make him pay. It does not
Page 188 U. S. 206
matter that the law would not need to be invoked in the
particular case. Most of us do not commit crimes, yet we
nevertheless are subject to the criminal law, and it affords one of
the motives for our conduct. So, again, what enables any other than
the very creditor in proper person to collect the debt? The law of
the same place. To test it, suppose that New York should turn back
the current of legislation, and extend to debts the rule still
applied to slander, that actio personalis moritur cum
and should provide that all debts hereafter
contracted in New York and payable there should be extinguished by
the death of either party. Leaving constitutional considerations on
one side, it is plain that the right of the foreign creditor would
Power over the person of the debtor confers jurisdiction, we
repeat. And, this being so, we perceive no better reason for
denying the right of New York to impose a succession tax on debts
owed by its citizens than upon tangible chattels found within the
state at the time of the death. The maxim mobilia sequuntur
has no more truth in the one case than in the other.
When logic and the policy of a state conflict with a fiction due to
historical tradition, the fiction must give way.
There is no conflict between our views and the point decided in
the case reported under the name of State Tax
on Foreign-held Bonds,
15 Wall. 300. The taxation
in that case was on the interest on bonds held out of the state.
Bonds and negotiable instruments are more than merely evidences of
debt. The debt is inseparable from the paper which declares and
constitutes it, by a tradition which comes down from more archaic
conditions. Bacon v. Hooker,
177 Mass. 335, 337.
Therefore, considering only the place of the property, it was held
that bonds held out of the state could not be reached. The decision
has been cut down to its precise point by later cases. Savings
& Loan Society v. Multnomah County, 169 U.
, 169 U. S. 428
New Orleans v. Stempel, 175 U. S. 309
175 U. S.
In the case at bar, the law imposing the tax was in force before
the deposit was made, and did not impair the obligation of the
contract, if a tax otherwise lawful ever can be said to have that
effect. Pinney v. Nelson, 183 U.
, 183 U. S. 147
Page 188 U. S. 207
that two states, dealing each with its own law of succession,
both of which the plaintiff in error has to invoke for her rights,
have taxed the right which they respectively confer gives no cause
for complaint on constitutional grounds. Coe v. Errol,
116 U. S. 517
116 U. S. 524
Knowlton v. Moore, 178 U. S. 53
The universal succession is taxed in one state, the singular
succession is taxed in another. The plaintiff has to make out her
right under both in order to get the money. See Adams v.
173 Mass. 258. The same considerations answer the
argument that due faith and credit are not given to the judgment in
Illinois. The tax does not deprive the plaintiff in error of any of
the privileges and immunities of the citizens of New York. It is no
such deprivation that, if she had lived in New York the tax on the
transfer of the deposit would have been part of the tax on the
inheritance as a whole. See Mager v.
8 How. 490; Brown v. Houston,
114 U. S. 622
114 U. S. 635
Wallace v. Myers,
38 F. 184. It does not violate the
Fourteenth Amendment. See Magoun v. Illinois Trust &
Savings Bank, 170 U. S. 283
Matters of state procedure and the correctness of the New York
decree or judgment, apart from specific constitutional objections,
are not open here. As we have said, the question whether the
property was to be regarded as in transitu,
must be regarded as found against the plaintiff in error.
MR. JUSTICE WHITE dissents.