For the petitioner-defendant, John D. McMaster.
For the respondent-prosecutor, David T. Wilentz, attorney general (William A. Moore, of counsel).
Before Justices Case, Donges and Porter.
The opinion of the court was delivered by
PORTER, J. This certiorari brings before us for review a decree of the ordinary by which there was set aside a certain part of the inheritance tax assessed and paid In the Matter of the Estate of Charles D. Edmonston, deceased, and directing that there be a refund thereof.
It appears that the deceased died testate November 6th, 1934, a resident of this state, and seized and possessed of real and personal property subject to transfer inheritance tax by this state.
It further appears that on April 10th, 1929, while a resident of New York State, the decedent created a trust by written instrument under which he transferred cash and securities to the Title Guarantee and Trust Co., a corporation of New York, and to himself, in trust with the provision that the income be paid to his mother-in-law and upon her death to him for the benefit of his wife, the remainder to himself if living and, if deceased, to the trustees of the Masonic Hall and Asylum Fund. The power to alter, amend or revoke the trust was expressly reserved in the donor. The deceased donor became a resident of this state late in 1930 or early in 1931 and so remained until his death. On two different occasions during his residence here he exercised his right to amend the terms of the trust and withdrew portions of the trust property for his own use and purpose, thus decreasing the corpus of the fund.
The trust as thus amended was in effect at the date of the death of the donor, he not having exercised his power of revocation. The trustee was a corporation of the State of New York. The trust property consisted of cash and mortgages
on real property located in the State of New York. None of the trust property was ever located in the State of New Jersey, but was at all times in the possession of the trustee within the State of New York.
The petitioner submitted a transfer inheritance tax return to the respondent who duly assessed a tax which included tax claimed to be due on the trust estate in question. There followed certain negotiations between the parties which resulted in certain compromises or adjustments as to the amount of tax due, with which we are not concerned. Suffice it to say that the tax found due was duly paid. Later the petitioner applied to the respondent for a refund of the tax assessed and paid on the said trust fund, which claim was duly rejected. Proceedings were then instituted in the Prerogative Court by the petitioner alleging that the said tax was paid under protest and in error and praying for a decree ordering the respondent to refund the said tax claimed, with interest.
The learned vice-ordinary who heard the matter decided that the state was without authority to assess a tax on the property constituting the corpus of the said trust ...