In re Romaine’s Estate, 127 N.Y. 80 (1891)

A state can tax the succession of personal property owned by a non-resident intestate when the property is invested or habitually kept within the state, receiving the protection of its laws.

Summary

This case addresses whether New York can tax the inheritance of personal property within the state belonging to a non-resident intestate. The Court of Appeals held that it could, clarifying the scope of New York’s Collateral Inheritance Act. Worthington Romaine, a non-resident, had investments and bank deposits in New York. Upon his death, the state sought to tax the transfer of this property. The court reasoned that because the property was physically located and protected within New York, it was subject to its inheritance tax, regardless of the owner’s residency. This decision established a practical basis for taxing non-residents’ property within the state’s jurisdiction.

Facts

Worthington Romaine, a non-resident of New York, invested money in a bond and mortgage within New York and maintained deposits in New York savings banks.

Romaine died intestate (without a will).

The state of New York sought to impose an inheritance tax on the personal property of Romaine located within the state, which was passing to collateral relatives.

Procedural History

The lower courts upheld the imposition of the inheritance tax.

The case was appealed to the New York Court of Appeals.

Issue(s)

Whether the succession of personal property of a non-resident intestate, invested or habitually kept within New York, is subject to taxation under the Collateral Inheritance Act.

Holding

Yes, because the property is located within New York, receives the protection of its laws, and therefore, contributes to the expense of the government.

Court’s Reasoning

The court reasoned that the 1887 amendment to the Collateral Inheritance Act extended its reach to the property of non-resident decedents located within the state. The court distinguished this situation from property temporarily brought into the state by a traveler. The court stated that when a non-resident’s money is invested or habitually kept in New York, the statute applies both in letter and spirit. Such property receives the protection of New York laws and has every advantage from the government. The court emphasized the state’s power to tax property within its borders, stating, “A nation within whose territory any personal property is actually situated has as entire dominion over it while therein, in point of sovereignty and jurisdiction, as it has over immovable property situated there.” The court further noted that the legal fiction of mobilia sequuntur personam (movable property follows the person) does not apply in a well-adjusted system of taxation. The court noted earlier cases had held that the act applied only to estates of resident decedents, but the amendment changed that. The court also cited provisions of the act that made administrators liable for taxes and restricted the transfer of stock by foreign executors. Ultimately, the court held that the Act extended to property of non-resident intestates, because “all administrators” were liable for taxes and corporations could only transfer stock standing upon their books in the name of a non-resident decedent at their own risk until taxes were paid.