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soever he should by his last will appoint. | lahan v. Woodbridge, 171 Mass. 595, 597, 51 The son died May 16, 1912, and having exer- N. E. 176; Greves v. Shaw, 173 Mass. 205, cised the power of appointment by his will, 208, 53 N. E. 372; Moody v. Shaw, 173 Mass. allowed by the court of probate for the coun- 375, 53 N. E. 891; Bliss v. Bliss, 221 Mass. ty of Oxford in the state of Maine, the place 201, 207, 109 N. E. 148, L. R. A. 1916A, 889; of his residence, the trust terminated, and Walker v. Treas. & Recvr. Genl., 221 Mass. it became the duty of the trustees to trans- 600, 109 N. E. 647; R. L. C. 109, 88 32–39. fer the principal to the petitioners who are We thus come to the question whether the the executors of the donee, to be by them property consisting of personalty held in distributed in accordance with his testamen- trust falls within this classification; or in tary directions. Olney v. Balch, 154 Mass. other words, what on the record is the prop318, 322, 28 N. E 258; Tudor V. Vail, 195 erty interest to be taxed. No description of the Mass. 18, 80 N. E. 590. By St. 1909, c. 527, estate impressed with the trust by the testa8 8:

tor and testatrix, or of the power, if any, “Whenever any person shall exercise a power of investment or reinvestment conferred upof appointment derived from any disposition of on the trustees is to be found; nor do the property made prior to September first, nineteen terms of the will whereby the power has been hundred and seven, such appointment when made shall be deemed to be a disposition of exercised appear. It is, however, plain from property by the person exercising such power, the admitted recitals in the petition, that the taxable under the provisions of chapter five hun- trustees appointed originally, as well as the dred and sixty-three

of the year nine- duly appointed and qualified trustees at the teen hundred and seven, and of all acts in amendment thereof and in addition thereto in date of the death of the donee, held office the same manner as though the property to under our laws applicable to the administrawhich such appointment relates belonged abso- tion of trusts, and the accountability of truslutely to the donee of such power, and

had been tees for the proper management, investment bequeathed devised


by will.

and distribution of trust funds. Pub. St. And by St. 1909,.c. 490, pt. 4, $ 1:

c. 141; R. L. C. 147. The trusts were to be “All property within the jurisdiction of the administered here, and even if the certificates commonwealth, corporeal or incorporeal, and of stock or shares of the nature previously any interest therein, whether belonging to in described showing the extent of the property, habitants of the commonwealth or not, which shall pass by will, or by the laws regulating in- were in the possession of trustees domiciled terstate succession, or by deed, grant, oro gift in a sister state, this did not prevent the levy. shall be subject to a tax.

ing of a succession tax. Greves v. Shaw, 173 It is settled by Minot v. Winthrop, 162 Mass. 205, 53 N. E. 372; Brandeis v. Atkins, Mass. 113, 38 N. E. 512, 26 L. R. A. 259, 204 Mass. 471, 476, 90 N. E. 861, 26 L. R. A. Minot v. Treas. & Recvr. Genl., 207 Mass. (N. S.) 230; Bliss v. Bliss, 221 Mass. 201, 109 588, 93 N. E. 973, 33 L. R. A. (N. S.) 236, N. E. 148, L. R. A. 1916A, 889; St. 1910, c. and Clark v. Treas. & Recvr. Genl., 218 Mass. 531; Parkhurst v. Almy, 222 Mass. 27, 109 292, 105 N. E. 1055, that under these N. E. 733; Bellows Falls Power Co. v. Com., statutes whether the property disposed of 222 Mass. 57, 58, 59, 109 N. E. 891, Ann, Cas. under the power is subject to an inheritance 1916C, 834; R. L. C. 15, 12. The record does tax, is to be determined by the test whether not show that title to the principal in whatsuch tax could have been levied if the prop- ever form invested had been transferred by erty devised or bequeathed had belonged to the trustees to the executors. We assume howthe donee. The title in the case at bar pass-ever from the levying and payment of the tax, ed to the legatees by force of the wills of the the abatement of which and recovery back is donors of the power. Raymond v. Com., 192 sought, and from paragraph two of the peMass. 486, 78 N. E. 514; Harmon v. Weston, tition stating, that in accordance with our 215 Mass. 242, 249, 102 N. E. 470. And if statutes applicable to foreign wills ancillary because of the exercise of the power the letters have been issued to the petitioners as property could be applied in payment of his executors by the court of probate for the debts, yet through its exercise “a right of county of Suffolk, that transference and dissuccession to property may come into exist tribution has been effected. R. L. c. 15, $ 12, ence afterwards, which properly may be a

c. 143. It also is apparent, that at some perisubject, for the imposition of a tax." Minotod after the death of the donors, but prior v. Treas. & Recvr. Genl., 207 Mass. 588, 591, to the death of the donee, the trust funds in 93 N. E. 973, 974 (33 L. R. A. [N. S.) 236). question comprised the shares of stock in It is true that the donee was a nonresident. different corporations and associations as deBut if the property consisted of shares of cor- scribed in paragraphs eight and nine of the porations or of voluntary associations dom- petition and in the second paragraph of the iciled, or of national banks situated, in this agreed facts. If no changes of investment jurisdiction, the shareholders are the pro- had been made the property would have been prietors of the organizations, and as the nec- subject, under the exercise of the power of essary transfers by way of change of owner- appointment, to an inheritance or succession ship and distribution could not be effectuated tax. Clark V. Treas. & Recvr. Genl., 218 without the aid of our laws, a succession tax Mass. 292, 105 N. E. 1055; Walker v. Treas. could be levied. Minot v. Winthrop, 162 & Recvr. Genl., 221 Mass. 600, 602, 109 N. E.

time of the donee's death, the trustees, Rob- mand, and until retransference to pay the ert H. Gardiner and Robert H. Gardiner, Jr., trustees, who are referred to as the “promhis son, had ceased to hold these shares and isee,” on demand, and upon “surrender of only held contracts of the Gardiner Invest- the contract and the attached certificate, the ment Company, a corporation chartered by fair market value at the time of such dethe laws of the state of Maine, by the terms mand, less the actual expenses of sale of an of which the trustees purport to have sold equal number of similar shares,” such values the shares to the company. The company to be fixed at the election of the company by was incorporated with an authorized capital a public or private sale of it, or by an appraisof $1,000, divided into 100 shares of the par al of a disinterested person appointed by it value of $10 each. Of the stock, which had and the promisee. The investment company been fully paid, Robert H. Gardiner, the pres- further stipulates that until payment or re ident, held 98 shares, and Robert H. Gard-transference, it will pay to the promisee the iner, Jr., the treasurer, and one Bartlett, equivalent of all dividends in money accrued the clerk, each held one of the two remain- and paid upon the stocks after the date of ing shares; and these officers also constitut- the contract, or upon an equal number of ed the board of directors, as well as the per- similar shares; and until full performance of manent stockholders. While the charter re- these obligations, the investment company cites that the corporation is organized “to is to keep in the custody of the trust company buy, sell, own, hold, manage, and deal in, certificates owned by the investment company bonds, mortgages, debentures, notes, scrip, for an equal number of similar shares; and shares of stock or of beneficial interest in any the promisee agrees to protect the trust compublic or private corporations or associations, pany "from all liability now or hereafter on or other securities or evidences of indebted account of its ownership of said shares." If ness of any person, association, or corpora- the investment company makes default, then tion; and to do any act and all things inci- the trust company is irrevocably appointed dental, pertaining, necessary, or proper to the “its true and lawful attorney, with power of conduct of said business; but this corpora- substitution, in its name and behalf to sell, tion shall not do any kind of a banking busi. assign, and transfer over such shares standness, or that of a corporation intended to ing in its name, and pay the proceeds to the derive profit from the loan or use of money," promisee." The investment company, howthe company, until dissolved in the year fol- ever, reserves the right at any time before lowing the donee's decease, and after the default, and on reasonable notice, to pay "Its enactment of our St. of 1912, c. 678, exempt. obligations hereunder without demand of the ing from the inheritance tax personal prop- promisee, and upon full performance shall be erty within the commonwealth of nonresident entitled to receive from the promisee a full decedents, transacted no business other than discharge hereunder and a surrender of this to issue “these contracts

to clients contract and the attached certificate.” The of Robert H. Gardiner, or of his son Robert "attached certificate" of deposit issued by the H. Gardiner, Jr., including trusts administer- trust company shows, that the stock named ed by them and persons for whom they were in the contracts stood in the name of the agents.” And "contracts accordingly were is. Gardiner Investment Company and was desued referring to stock of corporations or posited with the trust company on account associations formed or owning property in of the contracts, “which certificates, or others one or more of most of the states of the representing an equal number of similar United States and of several foreign coun- shares, are to be kept in the exclusive control tries." A small fee was paid to the company of this company, and redelivered to the when the various stocks were in some form Gardiner Investment Company only on surturned over and the contracts were issued, render of this certificate duly released by the but no consideration passed "except the promisee.” We do not find it requisite to ą agreements contained in said contracts." decision to determine whether the transaction The expenses incidental to issuing the con- set forth in this anomalous instrument is to tracts and depositing the stocks with the be characterized as a sale or as a pledge, or Maine Trust & Banking Company, a corpo- whether if turned over to the executors they ration of Gardiner, Maine, were borne by the could have enforced them, or required the investment company. If the terms of the legatees to accept one or more of the "concontracts are now examined, we find that the tracts” in payment of the legacy. The agreed Gardiners, describing themselves as trustees facts contain the stipulation, that the court under the will of William W. Tucker and may draw all reasonable and proper inferSusan E. Tucker, "for Lawrence Tucker, ences of fact from the facts agreed; and, inhereinafter called the promisee, have sold to dependently of this stipulation, the court upthe Gardiner Investment Company of Gardi-on a case stated by agreement of the parties, ner, Maine," a specified number of shares of "shall be at liberty to draw from the facts the stocks held in trust. The context shows and documents stated in the case any inferthat the company in consideration of the "ex. ences of fact that might have been drawn ecuted sale" agrees with the trustees either therefrom at a trial, unless the parties exto return the identical shares or furnish “an pressly agree that no inferences shall be equivalent number of similar shares" on de- drawn." St. 1913, c. 716, $ 5. It is obvious

from its limited capital, the character of the the varying circumstances of each case. business actually transacted, and its eva- Batchelder v. Batchelder, 220 Mass. 42, 44, nescent existence, that neither the stock nor 45, 107 N. E. 455. It is manifest that whatthe contracts of the Gardiner Investment ever corporate action may have been taken Company, which appear to have had no mar. in making and issuing the contracts it ket or intrinsic value, fall within the class amounted to nothing more than the formal of securities ordinarily selected by trustees expression of the will and purpose of the for the investment of trust funds, which in trustees, the corporators and stockholders. the case at bar appear to have been nearly Their predominant object although not speci. sixty-fold more in value than the capital or fied, in the charter, is stated in the agreed tangible assets of the company which could facts in these words: be reached and applied in payment of its ob “It was the desire and purpose of Robert H. ligations. The trustees, holding office, as we Gardiner, and Robert H. Gardiner, Jr., in form. have said, under the decree of our courts, to issuing contracts in its name in the manner and

ing the Gardiner Investment Company and in which they are accountable, must be pre- form set forth in the petition, to bring about the sumed to have known the duty required of result that persons to whom contracts were istrustees in the preservation, management and sued should be subject to the inheritance taxes disposition of trust funds.

only of the jurisdiction of the domicile of the

The rule obtain- decedents, and not to those of the jurisdiction ing in some jurisdictions does not permit out in which the corporations issuing shares of side investments by trustees unless permit- stock referred to in such contracts were re ted by the court, except in cases of necessity spectively formed.” to preserve the fund. Perry on Trusts (6th

The contracts in question, which contain Ed.) &$ 452, 454. The rule in this common no provisions for assignment or of transfer wealth in making investments is diferent, were issued to themselves. The trustees re and well settled. “They are bound to act serve the full beneficial interest of dividends in good faith and to exercise a sound discre- and rights to new stock if the capital of any tion." In many

cases invest of the corporations is increased, and can dements in stocks and bonds of great corpora- mand a return of the shares or the equivations organized and doing business in other lent which is stated to be “the fair market states have been approved, where it appeared value

of an equal number of simthat the investment was made in good faith, ilar shares,” while they assume "all liabiland in the exercise of a sound discretion, ity now or hereafter” on account of them. according to the standard of other men of The identical shares are then deposited with prudence, discretion and intelligence in the trust company, and in so far as the recthe management of their own affairs, in ord shows without any indorsement by the regard to the permanent disposition of investment company. And “at the time of their funds with a view to probable in the death of Lawrence Tucker no demand come as well as the probable safety of the had been made upon the Gardiner Investcapital to be invested.” Thayer v. Dewey, 185 ment Company by the promisees under the Mass. 68, 69, 70, 69 N. E. 1074. While in law contracts referred to in the petition for any a corporation is a person distinct from that payments thereunder, nor had any default of all the stockholders, and may deal with been made by said company under any of them and be dealt with by them as by other said contracts." The parties agreed that parties, nevertheless the owners of substan. all material statutes, and decisions of the tially the entire capital stock, by the domi- courts of the state of Maine printed in the nance conferred by such ownership can wield authorized publications of that state, should when acting in unison the chartered powers be taken as proved, and might be referred to of the corporation in accordance with their by either of them as if set out at length in will. Old Colony Boot & Shoe Co. v. Parker, the agreed facts. But in the brief for the Sampson-Adams Co., 183 Mass. 557, 567, 568, petitioners no reference is found to any stat67 N. E. 870. The instrumentality they use ute of that state authorizing the levy of an is the legal entity characterized as a corpora- | inheritance tax upon these contracts or the tion. And a court when necessary will “look shares of stock, or that in fact such tax has beyond the corporate form for the purpose been levied. The inference that the trustees of it, and of the officers who are identified who organized and controlled the corporawith that purpose." It cannot be used suc- tion, organized and used it in the adminiscessfully as a shield to conceal and pervert tration of estates of which they were trusthe truth. Seymour v. Spring Forest Ceme- tees, in furtherance of their own purposes tery Ass'n, 144 N. Y. 333, 340, 39 N. E. 365, as previously stated, is fully warranted. If 26 L. R. A. 859; Anthony v. American Glu- the contracts are viewed in the light of their cose Co., 146 N. Y. 407, 41 N. E. 23; McCas- inception, and environment, the real purkill v. U. S., 216 U. S. 515, 30 Sup. Ct. 386, pose actuating the trustees in procuring the 54 L. Ed. 590; Cook on Corporations (7th incorporation was not to avoid double taxaEd.) 88 663, 664; Machen on Corporations, $$ tion, but on the record 'to circumvent the 1078, 1089; 7 R. C. L. Corporations, $ 4. laws of this jurisdiction, and to forestall The application of this rule under well recog- the possibility of a levy of the tax imposed nized modern methods of individuals carry- by the tax commissioner. A man may

curing a lower rate of taxation. Thayer v. this commonwealth. This succession tax Boston, 124 Mass. 132, 148, 26 Am. Rep. 650. can be levied and collected only on the theBut when he endeavors to escape all lawful ory that the property disposed of by the will taxation by the employment of devices sim- of Lawrence Tucker under the power of apilar to those discussed, bis conduct will not pointment, was his property. St. 1909, c. 527, receive the sanction of the courts, Ruben- 8 8. Such property is subject to a successtein v. Lottow, 220 Mass. 156, 169, 107 N. sion tax provided some necessary incident in E 718. The identity of purpose and unity the change of ownership wrought by his will of interest whether the trustees are con depends upon the actual or moral support of sidered as administering the trust as indi- the laws of this commonwealth, and not othviduals or as incorporated under the name erwise. Walker V. Treas. & Recvr. Genl., of the Gardiner Investment Company, is 221 Mass. 600, 109 N. E. 647. The property complete. We are satisfied, that in making which was the subject of disposition by the these contracts they dealt with themselves will of Lawrence Tucker, in form consisted and intended to retain and did retain full entirely of contracts of the Gardiner Investcontrol of the legal title to the shares of ment Company, a Maine corporation. It is stock which in reality comprised the trust only by declaring these contracts void and property transferred to the petitioners as saying that the property disposed of by his executors to be by them distributed to the will consisted of shares of stock in Massalegatees. Batchelder Batchelder, 220

chusetts corporations that the property disMass. 42, 44, 45, 107 N. E. 455, and cases cit. posed of by his will can be said to have been ed; Gadsden First Nat. Bank v. Winchester, subject to a succession tax in this common119 Ala. 168, 24 South, 351, 72 Am. St. Rep.

wealth. These contracts were issued by a 904; Evarts v. Killingworth Mfg. Co., 20 legally organized foreign corporation which Conn. 447, 457; Potts v. Schmucker, 84 Md. has no place of business in this common535, 36 Atl. 592, 35 L. R. A. 392, 57 Am.

wealth. The Maine Banking & Trust ComSt. Rep. 415; People v. North River Sugar Refining Co., 121 N. Y. 582, 621, 24 N. E. 834, place of business in this commonwealth, was

pany, another foreign corporation with no 9 L. R. A. 33, 18 Am. St. Rep. 843; Seymour involved in the transaction by reason of reV. Spring Forest Cemetery Ass'n, 144 N. Y. 333, 340, 39 N. E. 365, 26 L. R. A. 859; An: ceiving the stock in Massachusetts corpora

tions to hold as collateral security for the thony v. American Glucose Co., 146 N. Y. 407, 41 N. E. 23; Economic Fuel Gas Co. v. My contracts of the Gardiner Investment Comers, 168 Ill. 139, 48 N. E. 66; Donovan v pany according to the terms of a receipt isPurtell, 216 III. 629, 639, 75 N. E. 334, i sued by it. There were legitimate advanL. R. A. (N. S.) 176; State v. Standard Oil tages in simplicity of bookkeeping and ease Co., 49 Ohio St. 137, 30 N. E. 279, 15 L. R. of investment, arising out of the organizaA. 145, 34 Am. St. Rep. 541; First National The Gardiner Investment Company was a

tion of the Gardiner Investment Company. Bank of Chicago v: Trebein, 59 Ohio St. real corporation. Its capital stock was paid 316, 52 N. E. 834; J. McNeil & Brother Co.

in full. V. Crucible Steel Co., 207 Pa. 493, 56 Atl.

A corporation is a single and sep1067; Milbrath v. State, 138 Wis. 354, 120 arate legal being even though organized for N. W. 252, 131 Am. St. Rep. 1012; U. S. v.

the express purpose of taking over the busiMilwaukee Refrigerator Transit Co. (C. C.)

ness or conducting the business of one man. 142 Fed. 247, 255; Holbrook, Cabot & Rollins England v. Dearborn, 141 Mass. 590, 6 N. Corp. v. Perkins, 147 Fed. 166, 77 C. C. A. 462; E. 837; Salmon v. Salmon & Co., 1897 A. C. Simmons Creek Coal Co. v. Doran, 142 U. S. 22. As was said in Peterson v. C., R. I. & 417, 12 Sup. Ct. 239, 35 L. Bd. 1063; McCaskill Pac. Ry., 205 V. S. 364, 392, 27 Sup. Ct. v. U. S., 216 U. S. 504, 515, 30 Sup. Ct. 386, 513, 522 (51 L. Ed. 841), the corporation “was 54 L. Ed. 590. A majority of the court are

a separate legal entity, and, whatever may therefore of opinion that the contention of have been the motives leading to its creation, the petitioners that as the shares of stock it can only be regarded as such for the purbelonged to the Gardiner Investment Com- pose of legal proceedings." pany, and continued in its ownership, leaving

Whatever may be said as to the motives only the contracts in the hands of the trus- of the scheme here disclosed that affords no tees as the property of the trust of which basis for a legal tax upon property and percomplete succession could be effected with sons not within the commonwealth. One has out the aid of our laws, cannot be sustained. the legal power to change his domicile. If The tax assessed having been lawfully levied there is any distinction in principle between and collected, the decree of the court of changing it within the state for the purpose probate dismissing the petition should be of securing a lower rate of taxation which affirmed.

was held to be not unlawful in Thayer v. Ordered accordingly.

Boston, 124 Mass. 132, 148, 26 Am. Rep. 650, and removing from the commonwealth alto

gether for the purpose of avoiding a kind of RUGG, C. J. (dissenting). I cannot concur tax imposed here which may not prevail in in the opinion in this case and feel con another jurisdiction, that distinction is wholly strained to express my dissent. Lawrence against the present tax. The power to levy 'Tucker was a resident of Maine and not of a tax depends on jurisdiction and not on mo

tives of persons who are nonresidents. It, appear that any transfer of the shares of may be that the investment by the trustees stock in Massachusetts corporations has been of the funds of an estate being administered made or is necessary in order fully to exein a Massachusetts court in contracts of the cute the will of Lawrence Tucker, or that Gardiner Investment Company subjected such transfer is likely to be made within any them to personal liability in case of loss. reasonable time as a consequence of the full But that is not basis for taxation when the execution of that will. The circumstance investment is not within this jurisdiction. The that the wills under which the power of aplegatees of Lawrence Tucker, in case he had pointment was exercised were Massachusetts made a specific legacy of the contracts of wills is now of no significance. That circumthe Gardiner Investment Company, would stance would have subjected the property to bave a right to demand from the trustees the a succession tax as the law at first was encontracts, and not cash or the shares of stock acted. Emmons v. Shaw, 171 Mass. 410, 50 in the Massachusetts corporations which N. E. 1033. But that has been changed by were deposited with the Maine Banking & St. 1909, c. 527, § 8. The trustees under the Trust Company as collateral securities for Massachusetts wills are nonresidents and the contracts. No incident of the transfer hence no tax can be founded on their domiof such title would depend in any degree for cile, as in Welch v. Boston, 221 Mass. 155, its validity upon the support of Massachu- 109 N. E. 174. The fact that the trust estate, setts law. The testator was a nonresident and

as to which Lawrence Tucker exercised the the thing willed would be a security of a foreign corporation actually in the physical tered by our probate courts, affords no

power of appointment, was being adminispossession of persons outside of the com- foundation for the tax under the succession monwealth.

Confessedly the tax can be collected only tax law as it now exists. Clark v. Treas. & upon the transfer of shares of stock in Mas- Recvr. Genl., 218 Mass. 292, 105 N. E. 1055; sachusetts corporations which have been dis. Minot v. Treas. & Recvr. Genl., 207 Mass. posed of by the will of Lawrence Tucker and 588, 93 N. E. 973, 33 L. R. A. (N. S.) 236. whose transfer therefore, is dependent upon Doubtless it would be possible for the LegisMassachusetts laws. Greves 7. Shaw, 173 lature to establish a situs for taxation purMass. 205, 53 N. E. 372. But all these cer- poses within this commonwealth of all intificates of shares of stock in Massachusetts tangible personal property held by trustees corporations are in the name of the Gar- under Massachusetts wills, appointed by diner Investment Company and not in the Massachusetts courts. Newcombe v. Paige, names of the trustees. The custody of all 224 Mass. 516, 113 N. E. 458. But the Clark this stock is in the Maine Banking & Trust Case and the decisions on which it is foundCompany within the state of Maine by virtue ed show that that has not been done. It of a valid agreement between it and the seems to me that the petition ought to be Gardiner Investment Company. It does not granted.

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