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On this appeal from a final decree enjoining the collection of taxes for 1939 upon certain intangible personal property, the defendant-appellant presents the following statement of question involved:
Question: Where the owner of a life estate in the income from certain intangible personal property is domiciled in Florida and the said intangible personal property is held in trust in the State of New York for
the benefit of the owner of the life estate, the cestui having the power of appointment by will, is such a life estate taxable in Florida under the Intangible Personal Property Taxation Act of 1931?"
Amended Section 1, Article IX, of the Florida constitution requires the legislature to provide for a uniform and equal rate of taxation (except that the rate of taxation upon intangible property shall not exceed five mills on the dollar of the assessed valuation of such intangible property) and shall prescribe such regulations as shall secure a justvaluation of all property, both real and personal, excepting such property as may be exempted by law for stated purposes.
Pursuant to such organic requirements, statutes provide that:
"All real and personal property in this State and all personal property belonging to persons residing in this State not hereby expressly exempted therefrom, shall be subject to taxation in the manner provided by law." Sec. 893 (694) C. G. L.
"Every person . . . owning . . . intangible personal property in this State which is subject to taxation under the laws of Florida" shall make return of such property for taxation, etc. Sec. 8 Ch. 15789, Acts of 1931, Extra Session.
The statute defines "intangible personal property" as "all personal property which is not in itself intrinsically valuable but which derives its chief value from that which it represents." Sec. 2, Chap. 15789, Acts of 1931, Extra Session.
The statute of this State upon the subject of taxing intangible personal property is not as detailed as those of Pennsylvania and other States, but the Florida statute is broad and comprehensive, and when interpreted
and applied under the provision of the constitution, includesall personal property, tangible and intangible, that may legally have a taxing situs in this State. See City of St. Albans v. Avery, 95 Vt. 249, 114 A. 31, Fonda v. City of St. Albans, certiorari denied, 257 U.S. 640.
The record on this appeal does not contain a copy of the tax assessment here involved, as made in Dade County, Florida; but the bill of complaint alleges:
"That the Tax Assessor of Dade County, Florida, for the year 1939 did assess and value the intangible personal property of the plaintiff at Fifty-four Thousand Three Hundred Dollars ($54,300.00), and levied upon said assessed valuation and against the plaintiff, a tax of two (2) mills for the year 1939, . . . ."
"That the plaintiff filed in the office of the Tax Assessor of Dade County, Florida, for the taxable year 1939, his duly verified return of all intangible personal property belonging to the plaintiff; that the only intangible personal property listed in said return was a Seven Hundred Dollar ($700.00) deposit in a New York bank. Plaintiff says that he has not paid the intangible personal property tax on said deposit, but is ready, able and willing and offers to pay the same when directed by the Court."
The deed of trust states that the bonds constituting the principal of the trust fund "are of the approximate present market value of $100,000.00."
The challenge goes to the power of the State of Florida to tax any part of or interest in the intangible trust property, owned by the appellee Ford.
The deed of trust, quoted from in the statement, was executed in New York State, the domicile of the donor and of the trustee. It provides for, and the law
recognizes, distinct and separate legal and equitable rights or interests in the trust fund, consisting of intangible personal property represented or evidenced by bonds of private corporations which presumably are negotiable. Each separate and distinct right or interest in the trust fund may be appropriately taxed. Curry vs. McCanless, 307 U.S. 357,59 Sup. Ct. 900, 83 L.Ed. 1339, 123 A. L. R. 162, and cases cited. The donor or grantor reserved no interest or rights with reference to the trust property. The trust is irrevocable. The domicile of the cestui que trust was not mentioned or in any way restrained; nor was the inherent power of the adult cestuique trust to alienate his interest in the trust fund restrained by the deed of trust.
The trustee is given the legal title to and the right to the possession of, the bonds, with the right to administer the fund "for the sole benefit, support and maintenance of Richard Franklin Ford, son of the Grantor, during his lifetime," the said Richard being given the power of appointment by will. This necessarily vests in the cestui que trust now domiciled in Florida a present beneficial equitable estate, right or interest in the trust property, Blair v. Commissioner,300 U.S. 5, 57 Sup. Ct. 330, 81 L.Ed. 465, for his sole use and purposes during his life, with the power of appointment by will of the entire property. See Secs. 183 and 263 of 2 Bogert on Trusts and Trustees; Sec. 130 et seq., 1 Scott on Trusts. See also Judge Stone's article, 17 Columbia Law Review 467.
All parties having interests in, or relation to, the trust property are subject to applicable controlling law and thecestui que trust takes his bounty cum onere.
It does not appear that the legal right and interest
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On this appeal from a final decree enjoining the collection of taxes for 1939 upon certain intangible personal property, the defendant-appellant presents the following statement of question involved:
Question: Where the owner of a life estate in the income from certain intangible personal property is domiciled in Florida and the said intangible personal property is held in trust in the State of New York for
the benefit of the owner of the life estate, the cestui having the power of appointment by will, is such a life estate taxable in Florida under the Intangible Personal Property Taxation Act of 1931?"
Amended Section 1, Article IX, of the Florida constitution requires the legislature to provide for a uniform and equal rate of taxation (except that the rate of taxation upon intangible property shall not exceed five mills on the dollar of the assessed valuation of such intangible property) and shall prescribe such regulations as shall secure a justvaluation of all property, both real and personal, excepting such property as may be exempted by law for stated purposes.
Pursuant to such organic requirements, statutes provide that:
"All real and personal property in this State and all personal property belonging to persons residing in this State not hereby expressly exempted therefrom, shall be subject to taxation in the manner provided by law." Sec. 893 (694) C. G. L.
"Every person . . . owning . . . intangible personal property in this State which is subject to taxation under the laws of Florida" shall make return of such property for taxation, etc. Sec. 8 Ch. 15789, Acts of 1931, Extra Session.
The statute defines "intangible personal property" as "all personal property which is not in itself intrinsically valuable but which derives its chief value from that which it represents." Sec. 2, Chap. 15789, Acts of 1931, Extra Session.
The statute of this State upon the subject of taxing intangible personal property is not as detailed as those of Pennsylvania and other States, but the Florida statute is broad and comprehensive, and when interpreted
and applied under the provision of the constitution, includesall personal property, tangible and intangible, that may legally have a taxing situs in this State. See City of St. Albans v. Avery, 95 Vt. 249, 114 A. 31, Fonda v. City of St. Albans, certiorari denied, 257 U.S. 640.
The record on this appeal does not contain a copy of the tax assessment here involved, as made in Dade County, Florida; but the bill of complaint alleges:
"That the Tax Assessor of Dade County, Florida, for the year 1939 did assess and value the intangible personal property of the plaintiff at Fifty-four Thousand Three Hundred Dollars ($54,300.00), and levied upon said assessed valuation and against the plaintiff, a tax of two (2) mills for the year 1939, . . . ."
"That the plaintiff filed in the office of the Tax Assessor of Dade County, Florida, for the taxable year 1939, his duly verified return of all intangible personal property belonging to the plaintiff; that the only intangible personal property listed in said return was a Seven Hundred Dollar ($700.00) deposit in a New York bank. Plaintiff says that he has not paid the intangible personal property tax on said deposit, but is ready, able and willing and offers to pay the same when directed by the Court."
The deed of trust states that the bonds constituting the principal of the trust fund "are of the approximate present market value of $100,000.00."
The challenge goes to the power of the State of Florida to tax any part of or interest in the intangible trust property, owned by the appellee Ford.
The deed of trust, quoted from in the statement, was executed in New York State, the domicile of the donor and of the trustee. It provides for, and the law
recognizes, distinct and separate legal and equitable rights or interests in the trust fund, consisting of intangible personal property represented or evidenced by bonds of private corporations which presumably are negotiable. Each separate and distinct right or interest in the trust fund may be appropriately taxed. Curry vs. McCanless, 307 U.S. 357,59 Sup. Ct. 900, 83 L.Ed. 1339, 123 A. L. R. 162, and cases cited. The donor or grantor reserved no interest or rights with reference to the trust property. The trust is irrevocable. The domicile of the cestui que trust was not mentioned or in any way restrained; nor was the inherent power of the adult cestuique trust to alienate his interest in the trust fund restrained by the deed of trust.
The trustee is given the legal title to and the right to the possession of, the bonds, with the right to administer the fund "for the sole benefit, support and maintenance of Richard Franklin Ford, son of the Grantor, during his lifetime," the said Richard being given the power of appointment by will. This necessarily vests in the cestui que trust now domiciled in Florida a present beneficial equitable estate, right or interest in the trust property, Blair v. Commissioner,300 U.S. 5, 57 Sup. Ct. 330, 81 L.Ed. 465, for his sole use and purposes during his life, with the power of appointment by will of the entire property. See Secs. 183 and 263 of 2 Bogert on Trusts and Trustees; Sec. 130 et seq., 1 Scott on Trusts. See also Judge Stone's article, 17 Columbia Law Review 467.
All parties having interests in, or relation to, the trust property are subject to applicable controlling law and thecestui que trust takes his bounty cum onere.
It does not appear that the legal right and interest
of the trustee in the trust funds has been taxed, if it may be appropriately taxed, at the trustee's domicile. But the separate and distinct equitable estate, rights and interests that are vested in the cestui que trust by the trust deed under the law is intangible personal property owned by the cestui que
trust, which may be appropriately taxed in Florida against the resident cestui que trust upon the basis of the organic "justvaluation" of the present equitable property rights andinterests in the trust funds are vested in the cestui que trust beneficiary, Richard Franklin Ford. Such appropriate taxation is a sovereign right of the State when, as in this case, no provision of the Federal or State constitutions is thereby violated. Taxation of intangible personal property is expressly authorized by the State constitution and statutes, and appropriate tax under the rule stated above does not violate the Fourteenth Amendment of the Federal Constitution or other controlling law. See Commonwealth v. Sutcliffe, 283 Ky. 274,140 S.W.2d 1028; Curry v. McCanless, 307 U.S. 357,59 Sup. Ct. 900, 83 L.Ed. 1339, 123 A. L. R. 162.
The intangible personal property rights and interests of the adult cestui que trust has a situs for proper taxation at his domicile where he has the protection and privileges afforded by the government of the State of Florida. This is so even though the bonds representing or evidencing the intangible personal property of the trust fund are held and administered by the trustee at his domicile in New York, since the interest of thecestui que trust in the intangible personal property constituting the trust fund is intangible personal property belonging to the cestui que trust and such intangible personal property does not appear to have
been, by the use of it or otherwise, given a taxationsitus other than that of the domicile of its owner, the cestuique trust. The domicile of its owner is the situs which in general is given to such intangible personal property by the law. Hunt v. Turner, 54 Fla. 654, 45 So. 509. Such intangible personal property interest is "personal property belonging to a person residing in this State," and is subject to taxation in the manner provided by law. Sec. 893 (694) C. G. L. Section 1, Article IX, requires "all property, both real and personal, to be given "a just valuation" for taxation, except such property as may be exempted by law. Intangible property is personal property for taxation purposes.
The equitable right or interest of the Florida domiciledcestui que trust in the intangible trust fund is intangible personal property, with a taxation situs at the domicile of such equitable owner in this State, which is taxable under Chapter 15789, Acts of 1931, Extra Session, upon the basis of the "just valuation" (Sec. 1, Art IX, Constitution) of the property right or interest of the owner cestui que trust in the intangible personal property held in trust for his benefit. Thecestui que trust owner is domiciled in Dade County, Florida. See Hunt v. Turner, 54 Fla. 654, 45 So. 509; Starkey v. Carson,138 Fla. 301, 189 So. 385; Commonwealth v. Stewart, 338 Pa. 9,12 A.2d 444, affirmed in Stewart v. Commonwealth,312 U.S. 649, 61 Sup. Ct. 445, 85 L.Ed. 1101. See also Maguire v. Trefry, 253 U.S. 12, 40 Sup. Ct. 417, 64 L.Ed. 739; Blodgett v. Silberman, 277, U.S. 1, 48 Sup. Ct. 410, 72 L.Ed. 749; City of St. Albans vs. Avery, 95 Vt. 249, 114 A. 31; Certiorari denied257 U.S. 640, 42 Sup. Ct. 51; 66 L.Ed. 411; 61 C. G. L. 192-210.
In the Beardsley case, 77 Fla. 803, 86 So. 846, no trustee or beneficiary of the trust property was domiciled in the county where the intangible property was assessed for ad valorem taxes. See also Safe Deposit T. Co. v. Virginia,280 U.S. 83, 50 Sup. Ct. 59, 74 L.Ed. 180, where the whole corpus of the intangible personal property was assessed in Virginia to the trustee domiciled in Maryland and holder of the legal title with possession for administrative purposes.
In Brooke v. Norfolk, 277 U.S. 27, 48 Sup. Ct. 422,72 L. Ed. 767, the assessment was of the whole corpus of the trust fund against the life tenant beneficiary after the payment of the State income tax thereon, by the beneficiary.
In Baltimore v. Gibbs, 166 Md. 364, the entire value of thecorpus of the trust property was taxed in the State where the trustee was domiciled and the property was held for administration; and it was held that taxation of a portion of the value of the same corpus in Maryland where the cestui que
trust was domiciled, would be invalid double taxation.
THE DECREE IS REVERSED AND THE CAUSE IS REMANDED FOR APPROPRIATE PROCEEDINGS.
BROWN, C. J., TERRELL, BUFORD, CHAPMAN, THOMAS AND ADAMS, J. J., concur.
ON MOTION FOR REHEARING