Summary
In People ex rel. Darrow v. Coleman (119 N.Y. 137) the Court of Appeals had before it the question of the taxability of personal property owned by three trustees, two of whom resided in this State, the third, who had the actual custody of the property, residing in a foreign State. It was sought to tax the property here on account of the residence here of two trustees, who were joint owners of the property.
Summary of this case from People ex Rel. Stebbins v. PurdyOpinion
Argued January 13, 1890
Decided January 21, 1890
S.B. Brownell for appellants.
D.J. Dean for defendants.
It is substantially conceded, and it is in any event very plain that, prior to the act chapter 392 of the Laws of 1883, the assessment in question could not be sustained. ( People ex rel. Jefferson v. Smith, 88 N.Y. 576.) That act provides that "all debts and obligations for the payment of money due or owing to persons residing within this state, however secured, or wherever such securities shall be held, shall be deemed, for the purposes of taxation, personal estate within the state, and shall be assessed as such to the owner or owners thereof in the town, village or ward in which such owner or owners shall reside at the time such assessment shall be made * * *" This statute was passed the year subsequent to the decision of the case of People ex rel. Jefferson v. Smith ( supra), and the inference is not a labored one, which concludes that the law was enacted to meet that decision. In that case the relator, a resident of the village of Warsaw in this state, was the absolute owner of the securities which the assessors had attempted to reach for the purpose of taxation, but such securities were in the possession of agents residing without the state, and by the laws of the states where the agents resided the securities were liable to be taxed in those states. It was held by this court that the relator was not liable to be assessed for such securities. The idea that personal property follows the situs or residence of the owner, while in some cases a perfectly proper legal fiction to be indulged in for purposes of justice, was held not to apply in such a case for the purpose of imposing a tax upon a security not within the state and not protected by our laws.
The case here presented is one where the persons assessed are not the absolute owners of the property, but are trustees and have only a representative or official interest therein, and but two out of the three are residents within the state, while a third resides in another state and also has the custody and control of the property, and the beneficiaries are also non-residents. Does the act of 1883 meet such a case? We think not. It is not a debt due and owing to persons residing within this state, for it is one which is due or owing to them in connection with another who is a joint owner, and who is not a resident within this state and such other has possession of the securities. The statute means that the debt must be one which is solely due or owing to residents of this state. If the trustee residing here has possession of the securities, he can be assessed for them under the old law as a trustee in possession, even though there be other trustees non-residents. Nor do we think that the statute meant to include as owners, persons who were trustees only, and thus assess them for the property not held by them and not within this state.
Generally a man is not spoken of as the owner of property, who merely holds it as a trustee and in a representative capacity. He has the legal title, and he is to be assessed for it when it is within the state, but this is by express provision of statute, and such provision is not mentioned in the case of a trustee whose trust property is outside of the state and not in his possession.
The contention of the counsel for the tax commissioners would render property liable to double, or even treble, or still greater taxation, if the laws of other states were like ours and there were three or more trustees living in as many different states. The statute as it is may lead to injustice in the double taxation of personal property, once to its absolute owner in this state, and again in the hands of his agents in the shape of securities in their custody and control in other states. It is not for courts to widen the possible injustice which may be perpetrated under a statute, by giving it a construction not only not called for by its language, but forced and unnatural under the circumstances. It is unnecessary to go over the argument arising from an examination of the whole law of assessment, for the purpose of showing that the construction adopted by us is the correct one. We think that it plainly appears that the construction adopted by the learned General Term may lead to such a perversion of justice that no court ought to adopt it, unless constrained by the plainest language of the statute. We are of the opinion that such is not the language of this one.
This case is a good illustration of the inequitable consequences arising from the construction of the court below. The real, acting trustee lives in New Jersey. He has possession and control of the securities, which are bonds and mortgages upon lands in other states, and the beneficiaries are all non-residents of this state. And yet, by the action of the tax commissioners, because two of the trustees are residents of this state, although they have neither possession nor control of the property and none of it is in this state, the trust estate must pay tribute to us. We think not.
The order of the General Term should be reversed, and that of the Special Term, setting aside and vacating the assessment, should be affirmed, with costs.
All concur, except EARL, J. absent.
Ordered accordingly.