by a proceeding in rem, the actual situs of the res (and the forum) will be the actual situs of the debt.

-

It may

§ 123. Situs of Debt for Purpose of Taxation. perhaps be said to be contrary to the general practice for a State to tax the tangible chattels of a non-resident situated within its limits, such taxation being left to be imposed by the State of the owner's domicil, upon the theory that the property has its legal (though not its actual) situs at the owner's domicil. But taxation is emphatically an instance where a State has the right to throw aside all fictions and look at things as they are. Accordingly States frequently tax the tangible personalty of non-residents when actually situated within their borders. In such cases, however, the State of the actual situs only imposes the tax burden upon the property within its jurisdiction. It cannot constitutionally impose a personal liability upon the non-resident owner.2

But where the property is intangible, such as debts, more difficulty is experienced in ascertaining the situs where it may be taxed. The general practice is to treat debts as located, for purposes of taxation, at the creditor's domicil, and there is no doubt that they may have their situs there for that purpose. On the other hand, it would seem that, if the creditor were domiciled in one State and the debtor in another, there should be no reason why the latter State (which is the situs of the obligation and

8

1 Cooley, Taxation (2d ed.) 372; People v. Com'rs, 23 N. Y. 224, 240; Com. v. R. R. Co., 27 Gratt. (Va.) 344; Buck v. Miller, 147 Ind. 586, 45 N. E. 647, 648; Thorndike v. Boston, 1 Met. (Mass.) 242. See Borland v. Boston, 132 Mass. 89, 42 Am. Rep. 424.

2 Mills v. Thornton, 26 Ill. 300, 79 Am. Dec. 377; Com. v. Gaines, 80 Ky. 489; Leonard v. New Bedford, 16 Gray (Mass.), 292; Dow v. Sudbury, 5 Met. (Mass.) 73; Buck v. Miller, 147 Ind. 586, 45 N. E. 647, 648; People v. Com'rs, 23 N. Y. 224, 240.

* Hunt v. Perry, 165 Mass. 287, 43 N. E. 103; Dykes v. Lockwood, 2 Kan. App. 217, 43 Pac. 268; Bradley v. Bander, 36 Ohio St. 28, 3 Am. St. Rep. 547; Com. v. R. R. Co., 27 Gratt. (Va.) 344; Herron v. Keran, 59 Ind. 472; Ins. Co. v. Assessors, 47 La. Ann. 1544, 18 So. 519; Wilcox v. Ellis, 14 Kan. 589, 19 Am. Rep. 107; Baltimore v. Hussey, 67 Md. 112; Ferris v. Kimble, 75 Tex. 476; State Bank v. Richmond, 79 Va. 113; Tax on Foreign Held Bonds, 15 Wall. 300.

the actual situs of the debt) cannot lay a tax upon the creditor's property actually situated there, namely, the debtor's obligation to pay, provided in so doing it does not impair the obligation of contracts. And some courts have upheld such taxation. But, strangely enough, the general trend of judicial opinion seems to be in the direction of regarding such taxation as unlawful, upon the ground that the debtor has no property in the debt which can be taxed. This idea would certainly seem to be founded on a Where there is misapprehension. It is conceded that the debtor has no property in the debt belonging to the creditor, but his obligation to pay money owed by is itself valuable property belonging to the creditor, at least after wank in check the debt becomes due and enforceable, and no reason is perceived account it is why the State could not compel the debtor to pay a tax thereon, crediting him with the amount so paid on his debt. But, at best, this form of taxation is cumbersome, and has been but little not diffised, most States leaving debts of all sorts to be taxed at the

egarded

as

and taxed in

state where bank is: 18805189.

domicil of the creditor.

Thus shares of stock in a corporation are usually taxable at the domicil of the owner, not of the corporation; but the right of the State of the corporation's domicil also to lay a tax upon such stock is admitted."

In States whose policy is to tax choses in action at the domicil of the creditor, a question has sometimes arisen whether this includes negotiable instruments. Some courts, regarding them as actual currency, have sustained taxation upon them where

♦ Bridges v. Griffin, 33 Ga. 113; Railroad Co. v. Collector, 100 U. S. 595; United States. R. R. Co., 106 U. S. 327; Finch v. York County, 19 Neb. 50.

Cooley, Taxation (2d ed.), 22; citing State Tax on Foreign Held Bonds, 15 Wall. 300, 319, 320; Oliver v. Washington, 11 Allen (Mass.), 268; Com. v. R. R. Co., 27 Gratt. (Va.) 344; and other cases.

6 Bradley v. Bander, 36 Ohio St. 28, 38 Am. Rep. 547; Nashville v. Thomas, 5 Coldw. (Tenn.) 600; Worth v. Ashe Co., 90 N. C. 409. And this, even though a tax has already been paid on the stock in the domicil of the corporation. See McKeen v. Northampton Co., 49 Penn. St. 519, 88 Am. Dec. 515; Dwight v. Boston, 12 Allen (Mass.), 316; Dyer v. Osborne, 11 R. I. 321, 23 Am. Rep. 460; Seward v. Rising Sun, 79 Ind. 351.

Tappan v. Bank, 19 Wall. 490; Faxton v. McCosh, 12 Ia. 527; American Coal Co. v. Allegheny County, 59 Md. 185. But see Union Bank v. State, 9 Yerg. (Tenn.) 490.

ROT. (Joey)

8

the paper evidences of indebtedness happen to be, regardless of the locality of the creditor's residence. But this view is inconsistent with the real facts and with general principles, and the better opinion is that they should be taxed at the creditor's domicil.

§ 124. Situs of Debt for Purpose of Administration. — In connection with the subject of executors and administrators, we have seen that wherever a decedent's assets are actually situated in a State other than his domicil, it is a general principle that such assets must be first of all administered in conformity to the lex fori and lex situs of the property, in the interest of the citizens of the forum and actual situs of the property, before it is to be regarded as subject to the lex domicilii of the decedent. It will be remembered that the executor or administrator must qualify anew in every jurisdiction where the deceased has left assets, and that until such qualification no act of the domiciliary administrator will be of any effect, as to property situated in another State, at least if there are any citizens of that State who may be injured by such action.1

Little difficulty is experienced in applying these principles when the assets are tangible chattels, capable of occupying space, and therefore possessing an actual situs of their own. But the ascertainment of the situs of a debt for these purposes has given the courts some trouble, which has arisen in large measure from the failure to observe the distinction between the legal and the actual situs of debts, already adverted to.2

Thus we find the courts divided in opinion upon the question whether an executor or administrator appointed in the State of a deceased creditor's domicil can there assign the debt to a third person so as to enable him to sue the debtor in another State.

• Redmond v. Rutherford, 87 N. C. 133; Wilcox v. Ellis, 14 Kan. 588, 19 Am. Rep. 107; Poppleton v. Yamhill County, 18 Oregon, 377.

9 State Tax on Foreign Held Bonds, 15 Wall. 300; Boyd v. Selma, 96 Ala. 144, 11 So. 393; State Bank v. Richmond, 79 Va. 113; New Orleans v. Ins. Co., 30 La. Ann. 876, 31 Am. Rep. 232; Lanesborough v. Berkshire County, 131 Mass. 424.

1 Ante, §§ 105 et seq.

2 See Wyman v. Halstead, 109 U. S. 656.

In Dial v. Gary, it was held that the assignee could not sue, since that would be practically to permit a foreign administrator to administer upon the decedent's property in South Carolina, without having qualified therein or administered there, whereby its own citizens might be injured.

4

On the other hand, in Petersen v. Chemical Bank, the debtor was sued in his domicil (New York) by the assignee of an administrator appointed in Connecticut, the creditor's domicil, and it was held he was entitled to recover. In this case, however, the court states that there were no creditors of the deceased in New York, and that there was no motive for forbidding the withdrawal of the assets.

Upon principles already noted, the law of the actual situs of the debt (and the forum) will govern the administration, so long as the enforcement of that law is necessary to the protection of its citizens. And the actual situs of the debt in the cases given above was the domicil of the debtor, for that was where his obligation to pay was sought to be enforced. No assignment of the debt therefore in its legal situs (the creditor's domicil) could operate to pass title to a debt actually situated in another State (the debtor's domicil) any more than the transfer of a tangible chattel under similar circumstances. To this extent therefore the South Carolina decision was clearly correct. But if there are no creditors of the decedent in the forum and actual situs, the reason for looking to the actual situs of the debt ceases, and the proper law (lex domicilii) will once more be applicable." In this aspect of the case, the New York decision was also

correct.

It has been said that the first branch of the rule does not apply to negotiable instruments, and that an administrator may

14 S. C. 573, 37 Am. Rep. 737.

4,32 N. Y. 21,

32 N. Y. 48.

88 Am. Dec. 298.

The court seemed to consider that fact of little importance, but it is submitted that it is the point upon which the decision should turn. • See also Stearns v. Burnham, 5 Greenl. (Me.) 261; Vroom v. Van Horne, 10 Pai. Ch. 549, 42 Am. Dec. 94; Hall v. Harrison, 21 Mo. 227, 64 Am. Dec. 225. But see Harper v. Butler, 2 Pet. 239.

Petersen v. Chemical Bank, 32 N. Y. 21, 48, 88 Am. Dec. 298; Harvey v. Richards, 1 Mason, C. C. 380, 413.

freely dispose of them, though the debtor lives in another State, since to refuse the assignee the right to sue the debtor upon such a note would put a stop to its negotiability."

Another point, upon which the courts are divided, the solution of which is dependent upon the actual situs of a debt, is whether an administrator may sue a debtor of the estate domiciled elsewhere, but whom he finds transiently in the State of his appointment. Since, as we have seen, the actual situs of a debt is any State where the obligation to pay may be enforced by suit, and since in this case the debtor has come within the jurisdiction of the administrator, there is no doubt that, stricto jure, he is entitled to sue him there. The case is analogous to that of a tangible chattel of a decedent, to which one administrator of the deceased is entitled, transiently passing through the State of another administrator of the same decedent. There can be no doubt that the administrator of the latter State may lay hold of such property for the benefit of its own resident creditors. But such action would appear to be closer akin to robbery than to justice, and would hardly comport with the comity that should regulate the relations of States to each other.10

If there are no creditors of the deceased, or the administration has been completed, the creditors paid off, and the only thing remaining is to distribute the residuum, the actual situs of the debt ceases to furnish the applicatory law, and its legal situs (in this case the legal situs, or domicil, of the creditor) resumes its sway.11

§ 125. Situs of Debt for Purpose of Attachment and Garnishment.1 - Perhaps on no one point has there been a greater

Story, Confil. L. §§ 258, 259; Petersen v. Chemical Bank, 32 N. Y. 21, 42, 88 Am. Dec. 298. Here there is a conflict of policies, the relative impor tance of which the courts of the forum must decide.

• See Merrill v. Ins. Co., 103 Mass. 245; Stevens v. Gaylord, 11 Mass. 256; Hall v. Harrison, 21 Mo. 227, 64 Am. Dec. 225, 227.

10 See Crouch v. Dabney, 2 Gratt. (Va.) 415.

11 Mayo v. Equitable Society, 71 Miss. 590, 15 So. 791; Petersen v. Chem. ical Bank, 32 N. Y. 21, 88 Am. Dec. 298; Harvey v. Richards, 1 Mason, C. C. 380, 413. See Dawes v. Boylston, 9 Mass. 337.

1 In the preparation of this section, the writer has been much aided by