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Citizens Bank and Trust Co. v. Glaser

Decided: April 8, 1976.


For reversal -- Chief Justice Hughes, Justices Mountain, Sullivan and Clifford and Judge Conford. For affirmance -- Justice Pashman and Schreiber. The opinion of the Court was delivered by Conford, P.J.A.D., Temporarily Assigned. Schreiber, J. (dissenting). Justice Pashman joins in dissent.


This appeal presents the question of the correctness of the determination by the respondent, affirmed by the Appellate Division, that Inez Duff Bishop died domiciled in New Jersey, thereby subjecting her intangible personal property to the New Jersey Transfer Inheritance Tax. Appellants contend domicile at death was in Virginia.

Mrs. Bishop, a widow, died April 13, 1966. In December 1966 the executors of the estate filed an inheritance tax return in New Jersey and paid a tax of about $100,000 on an estate of approximately $1,750,000. About $13,000 was refunded. Subsequently the executors protested the payment, supporting their position with affidavits and depositions to sustain the claim of Virginia domicile. The protest was rejected by the tax bureau December 4, 1972. An appeal by the estate to the Appellate Division was stayed in order to allow reconsideration and the making of adequate findings of fact by the bureau conformable with our recommendations in Lyon v. Glaser, 60 N.J. 259, 273-276 (1972).

A hearing was thereafter held before Robert R. Ross, a hearing officer for the bureau. The hearing was primarily on documents and depositions, with little oral testimony. In a thoroughly considered opinion fully analyzing the material facts and the law the hearing officer arrived at the conclusion that Mrs. Bishop had changed her domicile from

New Jersey to Virginia after 1933 and that the applicable estate was therefore not taxable here.

The respondent Director of the Division of Taxation rejected the hearing officer's findings and conclusions and found decedent to have died domiciled in New Jersey. He relied solely on the following facts: (a) she voted in New Jersey from time to time between 1943 and 1964; (b) she filed her federal tax returns giving New Jersey as her residence; (c) she never paid Virginia state income taxes.

The Appellate Division affirmed in an opinion concluding there was "ample evidence in the record to justify the Director's determination * * *". The court was "loath" to find, as did the hearing officer, that a woman like Mrs. Bishop would continue indicia of New Jersey residence (voting and paying federal taxes from New Jersey) just to avoid payment of the Virginia income tax.

Since the only administrative appraisal of the material facts in a quasi-judicial manner in the Division of Taxation (see Lyon v. Glaser, supra, 60 N.J. at 273) is that set forth in the hearing officer's report, and as we regard it as an accurate reflection of most of the material proofs, we set forth the factual recitals of that document.

The salient facts in this case are not in dispute with respect to the submitted evidence of the material events in the life of the decedent. The following sequence and pattern of germane activity is narrated as being fairly drawn from the evidence presented.

Inez Duff Bishop was born Inez Duff in the State of Virginia in 1875. In 1917 when she was in her early forties, Miss Duff left Virginia to attend nursing school in New York City. In the same year she met and married Arthur Bishop, a man of extensive wealth, and moved with him into his home in New Brunswick, New Jersey. Mrs. Bishop and her husband also owned and maintained a summer home in Beach Haven, New Jersey. With these two residences in operation, the couple obviously resided and were domiciled in the State of New Jersey from the time of her marriage until Arthur Bishop died in 1933. He was buried in New Brunswick. As herein before indicated, Mr. Bishop left his widow a considerable dollar amount of assets.

The New Brunswick home that the decedent and her husband had occupied apparently reverted to Mr. Bishop's first wife upon his

demise. To fulfill what she considered was her husband's desire, Inez Duff Bishop subsequently purchased the house from her deceased husband's first wife and donated it to the Elks, one of the deceased Mr. Bishop's favorite lifetime interests. Mrs. Bishop sold the other home that she and her husband had formerly occupied in Beach Haven, New Jersey but contemporaneously apparently built another home in Beach Haven, New Jersey a few doors away from their former home. This newly built Beach Haven home was a two story residence with central heating and other then modern facilities.

Inez Duff Bishop continued to spend a few months of the summer season annually in Beach Haven, New Jersey until a year or possibly two before her death when she had apparently become too ill to travel from Virginia to New Jersey. In 1933 Mrs. Bishop had purchased a home in Charlottesville, Virginia where she appears to have spent at least sixty percent of her time annually. However, in 1943 Inez Duff Bishop had registered to vote in New Jersey and she last voted in New Jersey, by absentee ballot, two years before her death. Mrs. Bishop, after her husband's death, seems to have placed her financial affairs in the trust of her brother, Ernest Duff, who resided in Charlottesville, Virginia. It is conceded that she maintained a residence (at least in the lay sense) in Charlottesville, Virginia until her death. Her brother took over her business affairs and had legal power of attorney over her affairs for several years prior to her death.

There is some evidence that Mrs. Bishop was a somewhat strong willed, active person when she was physically healthy and that she did play some part in the decision making processes. Mr. Duff, the brother, filed the decedent's income tax returns as attorney-in-fact. Her federal income tax returns were filed with a listing of the Beach Haven, New Jersey home as her address. Albeit, the State of Virginia during the years involved imposed an income tax on Virginia domiciliaries, no Virginia income tax returns were ever filed by the decedent. The evidence reveals that on one occasion Mrs. Bishop's accountant prepared the federal income tax return 1040 listing the Charlottesville, Virginia address as the legal residence. Mr. Duff rejected these returns, refused to execute them and ordered the accountant to redraft the returns with a listing of the Beach Haven, New Jersey address.*fn1 The interesting rationale behind this event and the attitude established can be found in the deposition of Emma Ruth Duff, the wife of Ernest Duff (now deceased), sister-in-law of the decedent. On Page 7, the following sequence appears:

Q Is Beach Haven a summer type seaside resort?

A Yes, it was entirely.

Q And what was Mrs. Bishop's purpose in coming here?

A For a summer home.

Q Why didn't she stay in Charlottesville?

A Am I supposed to tell the truth?

Q Yes. Why didn't she stay in Charlottesville in the summer?

A Because she wanted to evade the state income tax.

Q Why did she pick Beach Haven?

A Well, she knew through her husband that there was no state income tax in New Jersey.

There is overwhelming evidence that when physically able Mrs. Bishop was active in Charlottesville affairs and obviously had most of her financial dealings and social connections in that City, as well as, favoring that area with her charitable inclinations. It is indicated that Mrs. Bishop spent at least the extended spring and fall season of every year in Charlottesville, Virginia, a few summer months in Beach Haven, New Jersey and then also found time to spend the cold ...

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