On transfer inheritance tax appeal. On final hearing.
Mr. William D. Lippincott and Mr. John Milton, with whom were M. Nathan Mill and Mr. Harold Otis (of the New York bar), for the appellants.
Mr. William A. Stevens, attorney-general, Mr. Duane E. Minard, assistant attorney-general, and Mr. William A. Moore, assistant attorney-general, for the respondent.
John T. Dorrance died at Cinnaminson, New Jersey, September 21st, 1930. His executor petitioned for and obtained decree for probate of his will as a resident of Cinnaminson, in Burlington county, New Jersey; and subsequently made report of the assets of the estate, as of a resident decedent, to the state tax commissioner. The latter made an assessment of transfer inheritance tax amounting to nearly $17,000,000, against the estate, October 17th, 1931. He subsequently, on December 12th, 1931, opened the assessment and gave the executors permission to submit further evidence on the question of decedent's domicile; this having been submitted, the commissioner made a reassessment on October 10th, 1932, in the same amounts as before. From this assessment the executors appeal to this court.
The main contention of appellants (several other subordinate grounds of appeal, of minor importance, are specified in the petition) is that the assessment is erroneous, illegal and invalid because the commissioner found that decedent was domiciled in New Jersey at the time of his death, and included the value of decedent's intangible personal property in computing the tax; whereas (they contend), decedent was not domiciled in New Jersey, and hence no tax can legally be assessed in New Jersey in respect of the testamentary transfer of such intangible personalty.
Concededly the conclusion is true, if the premise be true. Tax on the testamentary (or intestate) transfer of a decedent's intangible personalty may be legally assessed and levied only by the state in which the decedent was domiciled at the time of his death; this is conclusively settled by the decisions of the United States supreme court in First National Bank of Boston v. Maine, 284 U.S. 312, 76 L. Ed. 313, 52 S. Ct. 174 , and Farmers' Loan and Trust Co. v. Minnesota, 280 U.S. 204, 74 L. Ed. 371, 50 S. Ct. 98, and this determination is controlling upon the courts of this state in this litigation.
The essential issue is therefore whether or not Dr. Dorrance, at the time of his death, was domiciled in New Jersey. If he was, then the tax in question is correct (at least substantially); if he was not, then no tax can be levied by New Jersey, except as to the few thousand dollars of tangible personal property located here -- for almost the whole of the estate (of some $115,000,000) consisted of stocks, bonds, and other intangible personalty. There are, however, a few subordinate or preliminary issues.
For some years prior to his death Dr. Dorrance had occupied two residence houses, one in New Jersey and the other in Pennsylvania. During the time the present proceedings were pending, similar tax proceedings were instituted against the estate in Pennsylvania, on the claim by that state that Dr. Dorrance was domiciled in Pennsylvania; this claim was sustained, and a tax assessed by the register of wills of Delaware county, Pennsylvania. On appeal to the orphans court of that county, that court adjudged Dr. Dorrance as domiciled in New Jersey and set the tax aside; but later the supreme court of Pennsylvania reversed the decree of the orphans court, and directed the assessment of a tax of some $17,000,000. The supreme court of the United States denied the application of the executors for review of that decree; and the executors were compelled to pay that tax to the Pennsylvania authorities.
The appellants contend that the determination by the Pennsylvania supreme court is controlling upon the authorities in New Jersey, upon the question of Dr. Dorrance's domicile. This is denied by respondents.
Respondent contends that the appellants are estopped or precluded, for several reasons, from claiming that Dr. Dorrance was not domiciled in New Jersey. It may well be that this contention is sound. Certainly at first impression there would seem to be considerable weight to the argument that the executors, after having claimed by their sworn petition to the Burlington county surrogate, that Dr. Dorrance was domiciled (resident) in New Jersey; after the adjudication by the surrogate that he was so domiciled, and the consequent decree probating the will in Burlington county and issuing letters testamentary to these executors (on which letters depends their authority to act in these very proceedings and in the administration of the estate); after they have acted for some two years in administering the estate on the strength of that probate in Burlington county, so procured by them, and have obtained and received from the Burlington county orphans court, allowances of $1,500,000 for their services as such executors; after they have, by their original sworn petition to the tax commissioner in these proceedings, admitted and asserted that the decedent was domiciled in this state; and after the decedent himself (the very person whose property is concerned), has asserted in the strongest terms, in the very will which conferred authority on these executors to act as such, that he was domiciled in New Jersey; that the executors should not now be heard or permitted to claim that decedent was not domiciled in New Jersey.
In view of the publicity which has been accorded the litigation over this estate both in the courts of Pennsylvania and of New Jersey, and the public interest therein, this court has deemed it advisable to consider the main issue involved -- to wit, the issue as to the actual domicile of the decedent.
As has already been said, the appellants contend that this court is precluded from considering that issue; that the decision of the Pennsylvania court is conclusive and controlling upon this court. With that contention this court is unable to concur.
That contention, more fully expressed, is that (1) the Pennsylvania decision or decree was a final decree in a proceeding in rem; and (2) the res in that proceeding was the assessment and levy of transfer tax in respect of the intangible personal property of the decedent; (3) that the right of Pennsylvania to assess and levy such tax in a decedent's estate was, and must necessarily be, predicated upon the fact that the decedent was domiciled in Pennsylvania; (4) that under the law of Pennsylvania the determination of the Pennsylvania court in a proceeding of this kind is final and conclusive against all the world; (5) that by virtue of article 4, section 1, of the constitution of the United States and of the statute enacted to carry that provision into effect (the act of May 26th, 1790;U.S.Rev. Stat. § 905), that adjudication by the Pennsylvania court must be accorded the same effect by the New Jersey courts, and hence must, in this appeal, be regarded as final and conclusive against the State of New ...