Id.; Distinction Between. § 220 of the business community, such argument is certainly unavailing in this case, where the bonds themselves were at the owner's foreign domicile. They did not represent " property within the State" in any conceivable sense. What property they represented consisted in the debt of their maker and that species of property unquestionably must be considered to be, as a chose in action, the holder's and owner's, and to be inseparable from his personalty. The Supreme Court of the United States held in the Foreign Held Bonds Case, 15 Wall. 300, where the State of Pennsylvania assumed to tax the interest payable upon bonds issued by a Pennsylvania corporation, secured by a mortgage upon its property and held by a nonresident, that the tax was invalid. But debts owing by corporations like debts owing by individuals, are not property of the debtors in any All the property there can be, in the nature of things, in debts of corporations belongs to the creditors, to whom they are payable, and follows their domicile wherever that may be. Their debts can have no locality separate from the parties to whom they are due. In our consideration of the question, we should not lose sight of the fact that the State through the Transfer Tax Act is exerting its taxing power only over that as to which it had jurisdiction for the purpose of taxation. sense. * * the Act of 1885 In the Swift Case, 137 N. Y. 77, was under discussion, and the general theory of the Inheritance Tax Law was considered, and it was held to be a fundamental requirement that there should be jurisdiction over the subject taxed, or an actual dominion over the subject of taxation at the time the tax is imposed. It is obvious that the State has no jurisdiction over a right of succession which accrues under the laws of the foreign State. That is something in which this State has no interest, and with which it is not concerned. The legal title to these bonds or the debts they represent vested in the personal representatives of the decedent by force of foreign laws. The decedent was a creditor, to whom the obligors in the various bonds were indebted, the extent and terms of whose obligation were evidenced by those bonds. The legal situs of the indebted $ 220 Bonds and Stocks - Distinction Between. ness was at the creditor's domicile, and as the actual situs of the bonds themselves was also there, upon no theory can it be held that the provisions of the Transfer Tax Act could reach them in its operation. But with reference to the shares of capital stock owned by the decedent the court reversed the Appellate Division. Judge Gray says: The attitude of a holder of shares of capital stock is quite other than that of a holder of bonds toward the corporation which issued them. While the bondholders are simply creditors, whose concern with the corporation is limited to the fulfillment of its particular obligation, the shareholders are persons who are interested in the operation of the corporate property and franchises and their shares actually represent individual interests in the corporate enterprise. The corporation has the legal title to all the properties acquired and appurtenant; but it holds them for the pecuniary benefit of those persons who hold the capital stock. * As personalty, the legal situs does follow the person of the owner; but the property is in his right to share in the net produce, and, eventually, in the net residuum of the corporate assets, resulting from liquidation. That right as a chose in action must necessarily follow the shareholder's person; but that does not exclude the idea that the property, as to which the right relates and which is, in effect, a distinct interest in the corporate property, is not within the jurisdiction of the State for the purpose of assessment upon its transfer through the operation of any laws or of the act of its owner. The attempt to tax a debt of the corporation to a nonresident of the State as being property within the State is one thing, and the imposition of a tax upon the transfer of any interest in, or right to, the corporate property itself is another thing. The corporation is the creation of State laws, and those who become its members as shareholders are subject to the operation of those laws with respect to any limitation upon their property rights and with respect to the right to assess their property interests for the purposes of taxation. Id.; of Foreign Corporations. § 220 244. Bonds and Stocks of Foreign Corporations and Taxability of United States Bonds Between 1892 and 1898. The taxability of bonds and stocks of domestic and foreign corporations owned by nonresident decedents deposited in this State was considered in the Matter of Whiting, 150 N. Y. 27, the court holding that bonds of foreign as well as domestic corporations, and certificates of stock of domestic corporations (but not United States bonds or certificates of stock of foreign corporations) owned by a nonresident decedent, but deposited by him in a safe-deposit vault in this State, and so present in this State at the time of decedent's death, are subject to taxation under Act of 1892. The decedent died July 23, 1894, a resident of Rhode Island, and had money on deposit in a bank in this State, and certain bonds and stocks of both domestic and foreign corporations, and also United States bonds, which were all kept in a box rented by him in a safe-deposit vault in this State. All except the stock of foreign corporations were included in the appraisement, which was sustained by the surrogate and by the Appellate Division. Judge Vann, in writing the prevailing opinion, says: A majority of my associates, however, are of the opinion that the United States bonds, although physically present in this State, are not subject to a transfer tax. By their direction I announce, as the conclusion of the court, that the certificates of stock in question as well as of all of the bonds, except those issued by the United States, were properly held by the courts below subject to taxation under the Transfer Tax Act on account of their physical presence in this State; that although the State may have the power to impose a succession tax upon United States bonds, it has not yet done so; that the phrase property * over which this State has any jurisdiction for the § 220 Id.; Registered and Coupon Bonds. purpose of taxation" refers to the jurisdiction actually exercised through contemporary statutes, rather than to the entire jurisdiction actually possessed by the State; that hence the order appealed from should be so modified as to exempt from taxation the bonds owned by the decedent that were issued by the United States In view of this decision, with respect to the nontaxability of United States bonds, the Legislature, by chapter 88, Laws 1898, amended section 242, which defines the words "estate " and " property " by omitting therefrom the words "over which this State has any jurisdiction for the purposes of taxation," since which time United States bonds have been subject to transfer tax the same as other personal property. 245. Both Registered and Coupon Bonds of Foreign Corporations Are Taxable if Here. At the time the decision In re Bronson and In re Whiting was handed down by the Court of Appeals, the same court held, in the Matter of Morgan, 150 N. Y. 35, that bonds of foreign corporations, both registered and coupon, owned by a nonresident decedent. but habitually kept by him in a safe-deposit vault in this State, and so present in this State at the time of the decedent's death, are subject to taxation under the Act of 1892. In this case also the stock of foreign corporations was excluded from the appraisal, while the bonds of foreign corporations were included, and the court held that this was proper under the Whiting case (supra), that there was no distinction between the two cases except that, in the Whiting case it did not appear whether the foreign bonds were registered or coupon, while in the Morgan case there were both kinds. The courts, in construing the law as it existed in Money Deposited in Bank. § 220 1887, did not follow the rule established in the Whiting and Morgan cases (supra) in respect to the taxability of foreign bonds owned by a nonresident, but kept within this State. Matter of Gibbes, 84 App. Div. 510, 83 N. Y. S. 53; affd., 176 N. Y. 565, without opinion. In this case the testator died in 1888, and from the provisions of decedent's will it was determined that the taxability of his estate could not be determined, owing to certain contingent interests in remainder. These interests became vested in 1899, and a proceeding was commenced to fix the tax. It was contended that, under the Act of 1887 (the law in force at decedent's death), the bonds of a foreign corporation passing from the estate of a nonresident to a nonresident, although such bonds were within this State at the time of decedent's death, were not subject to tax. The surrogate held they were taxable (40 Misc. Rep. 581, 83 N. Y. S. 56) under the decisions In re Whiting (supra) and Matter of Morgan (supra). The Appellate Division reversed the surrogate, by a divided court (three to two), holding that the Act of 1892 was much broader in its terms than that of 1887, and therefore the two cases cited above were not controlling. And the Court of Appeals affirmed the decision of the Appellate Division. It has been the practice, however, in all cases where the decedent died since the Act of 1892, to tax the bonds of foreign corporations owned by a nonresident decedent, if such bonds were within this State at the time of his death. 246. Money Deposited in Bank. Matter of Houdayer, 150 N. Y. 37. John F. Houdayer died May 21, 1895, a resident of New Jersey. In 1876 he opened an account with the |