
    Montgomery County Court of Common Pleas.
    In the Matter of the Estate of Charles M. Wood, Deceased.
    
    Decided May 14, 1928.
    
      McMahon, Corwin, Landis & Markham, for Wood estate.
    
      Wm. H. Middleton, Jr., for the Tax Commission of Ohio.
    
      
       Affirmed by Court of Appeals.
    
   Snediker, J.

This case is in this court on appeal from a decision of the probate court of this county, which found that certain promissory notes of the estate of Charles Morgan Wood, who in his lifetime was a resident of the city of Ipswich, Massachusetts, which notes were for the amount of $115,-000, and were given as part payment on a land contract on lot 113 of the revised and consecutive numbers of lots on the plat of the city of Dayton, Ohio, and which are held in the state of Ohio by Robert G. Corwin as ancillary administrator of the estate of Charles Morgan Wood, deceased, ought not to be included in a computation of inheritance tax in this state..

The facts of the case are these: Victoria H. Wood, the mother of Charles Morgan Wood, deceased, was in her lifetime the owner of certain property in this city, located at the southwest corner of Second and Ludlow streets. On or about the 1st day of November, 1924, she entered into a contract of sale of that property with Abram. Schachne and Harry I. Schenck. By this contract it was provided that the purchase price thereof was $150,000, payable $15,000 in cash and the balance in notes in different amounts of $10,000, $15,000 and $20,000 each, falling due on the 1st day of November of each year subsequent to the date of the contract to and including the 1st day of November, 1932. There was a further provision that upon the payment of notes Nos. 1, 2 and 3, which aggregated $35,000, Schachne and Schenck would be entitled to and Victoria H. Wood would deliver a good and sufficient warranty deed for the property, taking back a first mortgage upon the real estate conveyed to secure the unpaid notes. Mrs. Wood died before the maturity of the first installment note. R. G. Corwin became her administrator and as such came into possession of all of them. On June 7, 1926, Charles M. Wood, who was the sole beneficiary of the will of his mother, Victoria H. Wood, gave her administrator a receipt for both the contract and the notes. The contract was sent to Boston, Massachusetts, to Mr. Wood’s agent and representative. The notes were endorsed by the administrator to the order of Charles M. Wood. At his request all of the notes were retained by the administrator, Mr.. Corwin, in Ohio as a matter of convenience, the makers living here.

After the payment of the note in November of 1926, Charles Morgan Wood, who was in Arizona, died testate on February 9, 1927, at which time these notes were still in possession of Mr. Corwin under the arrangement heretofore adverted to, with the understanding, however, that had Mr. Wood returned to Massachusetts they, were to be sent to him. Subsequent to the death of Mr. Wood his will was probated in the probate office of Essex county, Massachusetts. By this will, after providing for the payment of his just debts and funeral expenses, he gave to each of his daughters the sum of $100,000, payable in cash or in personal property or real estate in the discretion of his executrix, who was his wife, Annie S. Wood. He further provided “all the rest and residue of my property of gyery nature whatsoever, real, personal or mixed, wheresoever situate, I give and bequeath to my beloved wife, Annie S. Wood, her heirs and assigns forever.” And thereafter he nominated and appointed Annie S. Wood his executrix of his last will and testament and authorized and empowered her to settle and adjust all debts and claims against his estate,- and gave her such other general powers as were necessary to a proper administration thereof.

In the course of the administration of Mr. Wood’s estate, ancillary letters of administration of that estate were granted by the probate court of this county to Robert G. Corwin, with authority to administer “all and singular the assets situate within the state of Ohio which were of Charles Morgan Wood late of Ipswich, Essex county, in the state of Massachusetts * * * to administer according to law all the said assets and also the proceeds of the real estate of said decedent situate within the said state of Ohio, which may be sold for the payment of his debts which shall at any time, come into the possession of the said administrator or any person for him,” etc. As a part of the assets which came into Mr. Corwin’s hands as such ancillary administrator, and which it became his duty to administer according to law, was the $115,000 notes to which we have already referred. Upon a petition being filed by Mr. Corwin as such administrator with the will annexed for a determination of the amount of inheritance tax which ought to be paid by the estate on the succession to property in the state of Ohio, it was contended by the tax commission of Ohio that the state is entitled to collect inheritance tax on $115,000. When this was resisted by the administrator, Mr. Corwin, the court made the decision adversely to the contention of the tax commission, and the question was thereupon filed in this court on appeal.

The question for decision by this court is whether or not the state of Ohio may tax the succession to the notes owned by Charles Morgan Wood, deceased, who was at the time of his death a non-resident, and whose estate was administered upon in Massachusetts with an ancillary administration in this state, such notes being in the hands of Mr. Corwin, the ancillary administrator, for collection at the time of decedent’s death.

It is well for us to keep in mind, as was recently stated by Chief Justice Taft (in the case of Blodgett, Tax Commissioner, v. Silberman, Advance Opinions, United States Supreme Court, May 1, 1928, p. 470), that such a tax “is a tax not upon property but upon the right or privilege of succession to the property of a deceased person.”

“Taxes of this general character are universally deemed to relate, not to property eo nomine, but to its passage by will or by descent in cases of intestacy, as distinguished from taxes imposed on property, real or personal as such, because of its ownership and possession. In other words, the public contribution which death duties exact is predicated on the passing of property as the result of death, as distinct from a tax on property disassociated from its transmission or receipt by will, or as the result of intestacy.”

In determining the question which has been propounded to us, it will be necessary for us to examine the inheritance tax law of Ohio, as it is here that this tax is sought to be collected. The foundation of all the enactments found in the Code in this behalf is‘ laid in Section 7 of Article 12 of the Constitution of the state of Ohio, which, so far as concerns us, reads:

“Laws may be passed providing for the taxation of the right to receive or to succeed to estates.”' * * *
“As used in this subdivision of this chapter:

Pursuant to this constitutional provision the Legislature of the state of Ohio passed a law found in Sections 5831 et seq. of the Code relating to the levy and collection of a tax on succession to inheritance. Section 5331, in part, reads as follows:

“1. The words ‘estate’ and ‘property’ include everything capable of ownership, or any interest therein or income therefrom, whether tangible or intangible, and, except as to real estate, whether within or without- this state, which passes to any one person, institution or corporation, from any one person, whether by a single succession or not.
“2. ‘Succession’ means the passing of property in possession or enjoyment, present or future.
“3. ‘Within this state,’ when predicated of tangible property, means physically located within this state; when predicated of intangible property, that the succession thereto is, for any purpose, subject to, or governed by the law of this state.”

Section 5332 reads:

“A tax is hereby levied upon the succession to any property passing, in trust or otherwise, to or for the use of a person, institution or corporation, in the following cases:
“2. When the succession is by will or by the intestate laws of this state or another state or country, to property within this state, from a person who was not a resident of this state at the time of his death.”

The property in the hands of the ancillary administrator is such as would be included in the general term “intangible property,” and in order to come within the scope of subdivision two of Section 5332 of the General Code, the succession thereto must be “subject to or governed by the law of this state” and when we have determined whether or not it is so “subject to or governed” thereby, it ought not to be difficult to decide the question presented by this record.

The duties of an ancillary administrator under the Ohio Code are, to collect the proceeds and property of the estate, make application of them to the payment of the debts proved against the estate, and this having been done to pay the surplus into the court granting administration for the benefit of the estate of the decedent in the state where he resided at the time of his death. He has no dúty here as in some states to pay legatees according to the law of the domicile of the decedent. If any such payment is made to a legatee, it ought to be made by the personal representative appointed at the place of domicile.

Chief Justice Taft in the decision from which we have already quoted says:

“At common law the maxim ‘mobilia sequuntur per-sonam’ applied. There has been discussion and criticism of the application and enforcement of that maxim, but it is so fixed in the common law of this country and of England, in so far as it relates to intangible property, including choses in action, without regard to whether they are evidenced in writing' or otherwise and whether the papers evidencing the same are found in the state of the domicile or elsewhere, and is so fully sustained by cases in this and other courts, that it must be treated as settled in this jurisdiction whether it approve itself to legal philosophic test or not.”

This being a rule of the common law of this country and being universally recognized, the decision of the Supreme Court of the United States was “that intangible personalty has such a situs at the domicile of its owner that its transfer on his death may be taxed there.”

The Supreme Court of Ohio has long since discussed and decided the question as to what law governs the succession of the personal property of a non-resident of the state. In the 14 O. S., at page 424, and in the case of Swearingen v. Morris, the syllabus is:

“Personal property has no fixed situs, but adheres to the person of the owner, and, upon his death, the succession to it is governed by the law of his domicile.”

In the body of the opinion Judge Ranney says:

“Personal property has no fixed situs, adheres in contemplation of law to the person of the owner, and is disposed of, in almost every respect, whether of transfers inter vivos, testamentary dispositions, or successions, by the law of his domicile.1 The principle is founded in an enlarged policy, growing out of the transitory nature of personal property, and the general convenience of nations. As remarked by Judge Story (Confl. of Laws, Sec. 379) : ‘If the law rei sitae were generally to prevail in regard to movables, it would be utterly impossible for the owner, in many cases, to know in what manner to dispose of them during his life, or to distribute them at his death; not only from the uncertainty of their situation in the transit to and from different places, but from the impracticability of knowing, with minute accuracy, the law of transfers inter vivos, of testamentary dispositions and successions in the different countries in which they might happen to be.’ And after enumerating many other ‘serious evils/ detrimental to ‘the interests of all civilized nations/ which the application of this principle would involve, he very justly concludes that, ‘in maritime nations, depending upon commerce for their revenues, their power and their glory, the mischief would be incalculable/
“Lord Loughborough, in Sill v. Worswick, 1 Henry Black, 690, states the general doctrine with great force and precision. ‘It is a clear proposition/ he said, ‘not only of the law of England, but of every country in the world, where law has the semblance of science, that personal property has no locality. The meaning of that is, not that personal property has no visible locality, but that it is subject to that law which governs the person of the owner; both with respect to the disposition of it, and with respect to the transmission of it, either by succession, or by the act of the party. It follows the law of the person. The owner in any country may dispose of his personal property. If he dies, it is not the law of the country in which the property is, but the law of the country of which he was a subject, that will regulate the succession/
“Indeed, so universally has it been treated as a part of the jus gentium, and thus incorporated into the municipal law of every country, that C. J. Abbott declared it ‘not correct to say, that the law of England gives way to the law of the foreign country; but, that it is part of the law of England that personal property should be distributed according to the just domicili.’
“The doctrine has been universally acted upon in this country; and it will be readily seen, that it could nowhere be applied with greater benefit, or less inconvenience, than between the states of the American Union.”

It is unnecessary for us to quote other authorities to the same effect as the Swearingen case, which has not been reversed in this state and is an authority which controls us. Therefore, by the phrase defining “within this state,” viz.: “That the succession thereto is for any purpose subject to or governed by the law of this state,” the legislature must have intended to exclude intangible personal property of a nonresident found in Ohio at his death, unless it could be said that the succession thereto is subject to our state law for any purpose. The Supreme Court of Ohio has held (78 O. S., 258) : “As a general rule administration is a prerequisite to the devolution of the personal property .of a decedent.” They say that personal property of a decedent person, upon the appointment of the administrator, is vested in him by relation from the time of the death, and this opinion of the Supreme Court is supported by numerous authorities.

It follows from the foregoing that until full administration is had, succession, as defined by Section 5331 of the General Code, does not take place.

This administrator is an ancillary administrator and in his office and in the performance of his duties, cannot affect the administration in Massachusetts. As between him and the personal representátive of decedent in Massachusetts, there is no direct connection or dependance.

“Each is privy to the testator and would be estopped by a judgment against him, but they have not privity with each other in law or in estate. They receive their authority from different sovereignties and from different property. The authority of each is paramount to the other. Each is accountable to the court from whom he receives his authority; nor does the one come by succession to the other into the trust of the same property encumbered by the same debts as in the case of an administrator de bonis non who may be truly said to have an official privity with his predecessor in the same trust and therefore liable to the same duties.” (5 Howard’s Reports, p. 44.)

There could not then be in any sense, in this state, a full administration of the property in Ohio belonging to the Wood estate, unless it was all needed for the payment of local debts. When this ancillary administrator, appointed by the probate court of this county, transmits, in compliance with the provisions of the Code, the surplus of the personal property of the estate to the executor of the decedent in the other state, even then a succession may only occur, if such surplus is not needed for other purposes in the settlement of the estate at the place of domicile; and when and if it does so occur, it is subject to the láw of that place.

A leading case is found in the law reports, Chancery-Appeal Cases, at page 1 (Wallace v. Attorney General), in which the Lord Chancellor decided that “Succession duty is not payable on legacies given by the will of a person domiciled in a foreign country.” In discussing the point the Lord Chancellor says:

“The question, therefore, is whether, where a person domiciled abroad makes a will giving personal property in this country by way of legacy, the legatee is a person becoming entitled to that property within the true intent and meaning of the second section. I think not. I think that in order to be brought within that section it must be a person who becomes entitled by virtue of the laws of this country. Any wider construction would give rise to questions hardly to be surmounted. In collecting the diities, the officers of the revenue will in general find no difficulty, supposing the duties to be imposed only on persons entitled under our own laws. The officers know, or must be supposed to know, what these laws are with respect to the persons liable by our laws to the duties to be levied. But who the parties entitled under a foreign law are, is a question which no knowledge of our laws will enable them to solve. It can only be ascertained by evidence in every case showing what the foreign law is and who is entitled under it. In some cases this may admit of little or no doubt, but in others it may be a matter of great difficulty, and in no case can the officers safely act until the rights of parties have been ascertained litigiously.”.

After reading these words of the Lord Chancellor, we see the wisdom of that provision of the Code, which requires that the surplus of the estate in the hands of the ancillary administrator, after payment of the debts, shall be transmitted to the original administrator.

Another leading case is that of Thompson v. The Advocate General, found in Clark and Finnelly’s Reports, page 1, where the court decided:

“Personal property having no situs of its own, follows the domicile of its owner.
“The law of the domicile of a testator or intestate decides whether his personal property is liable to legacy duty.”

And in the case of Enohim v. Wylie, House of Lords Cases, Volume 10, page 1, the Lord Chancellor decided:

“The law of the domicile of a testator governs questions of testacy and intestacy, of the construction of the will, and of the rights of those who claim to be his next of kin.”

And he stated:

“I hold it to be now put beyond all possibility of question, that the administration of the personal estate of a deceased person belongs to the court of the country where the deceased was domiciled at his death. All questions of testacy and intestacy belong to the judge of the domicile. It is the right and duty of that judge to constitute the personal representative of the deceased. To the court of the domicile belongs the interpretation and construction of the will of the testator. To determine who are the next of kin or heirs of the personal estate of the testator, is the prerogative of the judge of the domicile. In short, the court of the domicile is the forum concur sus. to which the legatees under the will of a testator, or the parties entitled to the distribution of the estate of an intestate, are required to resort.”

From the foregoing and from numerous decisions in our own country it may be regarded as settled that the succession in personal estates of every description, wherever situated, is regulated by the law of the domicile.

Story in his work on the Conflict of Laws discusses the same question with the same result.

If it is true that the state of Ohio can by enactment govern and make subject the succession to intangible personal property bequeathed by a non-resident testator, we know of no legislation by which it has done so.

In view of the foregoing, we are unable to say that the succession to the notes here in question is “by will * * * to property within the state.” Our finding is in favor of the ancillary administrator.  