Nickel v. State

On Rehearing

By the Court,

Sanders, J.:

The above-entitled causes were briefed, argued, submitted, and considered as one case. Because of a change in the personnel of the court it became necessary to resubmit the causes, in order to. dispose of the petition for rehearing, and to finally determine the case of Nickel et al. v. State of Nevada; it appearing that the latter case remains undetermined.

No better way is suggested for assisting the court in searching for error, where a rehearing is granted, than to carefully consider a well-directed criticism of the opinion upon which its conclusion is based. In this instance counsel for the losing parties in polite terms insist that the opinion of the majority is in conflict with the well-established principles of comity of decisions between states, and that the opinion is contrary to private international law. The argument, coming as it does from such an eminent source, is worthy of some further consideration.

1. Every owner of property has the inherent right to dispose of his property in such form, such manner, and for such purposes as he may see fit; but where the devolution of title involves a succession or an inheritance tax, it is governed and controlled by the law of the forum, imposing the tax if the transfer sought to be taxed is within the jurisdiction of its tax authorities. The difficulty with the application of counsel’s rule of *46comity is that there is no foreign element in this litigation, other than it happens that the transfer in question was made, and the parties thereto and the property affected thereby were located, in our sister state of California. The property affected by the alleged transfer consists of 119,871.75 shares of the capital stock of a Nevada corporation. These shares of stock are primarily under the protection of the laws of Nevada, and the complete devolution of the title thereto ordinarily takes place according to the laws of Nevada. In Re Douglas County, 84 Neb. 506, 121 N. W. 596. But, aside from this, it must be conceded that, by the express terms of the Nevada inheritance-tax law, to the extent that the said shares of stock represented the property owned by Henry Miller, deceased, situated in Nevada, it is taxable. Section 1, Statutes of Nevada, 1913, p. 141. What, then, becomes of the rule of comity? Can it be employed to pervert the statute law of a sovereign state ? We do not think so. “Few general principles of private international law,” says Mr. Minor in his valuable work on Conflict of Laws, sec. 6, “are so well settled as the rule that no foreign law (even though, under ordinary .circumstances, it be the 'proper law’) will be enforced in a sovereign state, if to enforce it will contravene the express statute law or an established policy of the forum, or is injurious to its interests.” “If the policy of the forum,” says the author, “has been expressed in a statute which in terms covers even transactions having a foreign element, no difficulty will be apt to arise.”

The legislature of this state has spoken. There can be no question as to its pronounced policy to cover by its inheritance-tax law such foreign transactions as are disclosed by this record, and we decline to look to a foreign jurisdiction for an authority either to uphold the law or to evade its provisions. We are not concerned in the lex loci contractus, if the transfer or devolution of title to the property in question is taxable under our laws.

.We do not concede that the opinion of the majority *47does violence to the rule of comity of decisions between states, in that it conflicts with the opinion of the Supreme Court of California in the case of Nickel et al. v. State of California, 175 Pac. 641. It is true the court held the complaint in that case was good as against the demurrer, but it is inferable from the order and what is said by the court in its opinion that it would be entirely proper and permissible for the State of California, upon issue joined, to show as a matter of fact that the instrument (being the same as that involved in both of these cases) was made “in contemplation of death” and was not made for a “valuable and adequate consideration,” and liable to a tax under the statute of California. Stats. 1911, p. 713, sec. 1, subd. 3. In view of the findings of the lower court in the case at bar, and the present status of the case of Nickel et al. v. State of California, it is strange that counsel for appellants should cite this as an authority for the proposition that the conveyance in question is not taxable.

Our attention has not been directed to any decision of our sister state, or that of any other jurisdiction, that goes to the extent of holding that it is not permissible, for the purpose of claiming an inheritance tax, to attack a transfer and show by extrinsic proof that ah instrument of conveyance is subject to the lien of such a tax. If such be the law, estates in many cases would pass free from tax. The method usually adopted for the avoidance of such a tax is that pursued in this case. In Re Keeney’s Estate, 194 N. Y. 281, 87 N. E. 428.

2. But it is insisted that the trustees accepted the trust; that their active duties began immediately upon the delivery of the deed; that it contained no power of revocation, and under the statute of California it was irrevocable. Section 2280, C. C. Cal. Conceding this to be true as between the parties to the transaction, the weakness of the position is that the test in determining whether, under a deed, grant, or gift, the property was ■intended not to vest in possession or enjoyment until after the death of the grantor, does not depend upon *48whether a power to revoke has or has not been inserted, but upon whether or not the property passes with all the attributes of ownership, independently of the death of the transferor. State St. Trust Co. v. Treasurer and Receiver-General, 209 Mass. 373, 95 N. E. 851.

The learned trial judge in these cases, and the inheritance-tax appraiser of California in the case of Nickel et al. v. State of California, supra, found upon identically the same state of facts that the transfer was made by the decedent, Miller, in contemplation of death, without adequate and valuable consideration, and the same was intended to take effect in possession and enjoyment as to the grantees and beneficiaries therein named, other than the deceased, at or after the death of said decedent. This being true, it is immaterial, in this case, that the deed was dated and executed before the inheritance-tax law of Nevada became effective. It is the vesting of the property in possession and the enjoyment of the same upon the death of the grantor, and after the statute took effect, that renders it liable to the tax; and both those things happened in this case. Crocker v. Shaw, 174 Mass. 266, 54 N. E. 549; In Re Green’s Estate, 153 N. Y. 223, 47 N. E. 292; In Re Seaman’s Estate, 147 N. Y. 69, 41 N. E. 401; Inheritance Tax (Gleason & Otis) 90, 91. It is this well-recognized principle that distinguishes the case at bar from that of Hunt v. Wicht, 174 Cal. 205, 162 Pac. 639, L. R. A. 1917C, 961.

In view of the above findings, it may have been unnecessary for the trial court to find, expressly, that the deed of trust “was made, executed, and delivered with the express intent on the part of Henry Miller, deceased, to evade the inheritance-tax law of this state,” and to find “that said deed of trust is testamentary in character.” We concede that if,- upon any reasonable hypothesis, we could bring ourselves to the conclusion that as a matter of law the title to the specific shares of stock vested absolutely in the trustees before the act became effective, the motive of the grantor for making the deed *49would be immaterial; but where it is a question of fact, to be determined by the trial court from the nature and character of the conveyance, and from all the circumstances surrounding its execution, whether the property passed, the motive and the intent of the grantor and the bona fides of the transaction are material elements to be considered in determining whether the transfer is taxable.

We have carefully reviewed the evidence and given the exhaustive briefs our earnest consideration. Our conclusion is that the judgment in the above-entitled causes must be affirmed.

Coleman, C. J.,