McCeney v. County Commissioners of Prince George's County

Urner, J., delivered the opinion of the Court. By section 2 of article 81 of the Code of Public General Laws of Maryland it is provided: “All personal property in which any resident of this State has an equitable interest ²⁷ with the legal title to the same in some other person or corporation who is a non-resident shall be valued and assessed for the purpose of state, county and municipal taxation to the equitable owners thereof in the county or city in which he, she or it resides and such equitable owner or owners shall pay the taxes thereon.” The question in this case is whether a trust estate, consisting’ of stocks and bonds, possessed and administered by trustees in the District of Columbia under a trust, created by the will of a resident of the district, for the benefit of the appellant for life, is legally assessable to him for state and county taxation in Prince George’s County, where he resides. The validity of such an assessment by the county commissioners of that county was sustained by the State Tax Commission, and its order to that effect was affirmed by the court below, whose decision we now have under review. It appears that the trust estate is assessed to the trustees for the purposes of taxation in the District of Columbia, and the taxes there levied on the estate are paid out of the income to which the appellant is entitled.

He complains that the duplication of tax charges, with respect to the trust property, resulting from the taxation in Maryland when it is already taxed in the District of Columbia, subjects him to a burden which the Code provision referred to was not intended to impose. It may be unfortunate that the appellant’s residence and the place of administration of the trust estate of which he is the beneficiary are so located as to expose him to tax charges by two separate sovereignties with respect to the securities in which the estate is invested. But the only pertinent and permissible inquiry in this case is whether the appellant, a resident of Maryland, has such a property interest in the intangible estate, administered by the non-resident trustees, as should be held to be within the real and valid purview of our statute. If its provisions are applicable, the result would not be legally objectionable as double taxation, since only one such exaction under the laws of Mary ²⁸ land is involved.

Cooley on Taxation (4th. Ed.), vol. 1, sec. 230; 37 Cyc. 755. In Baltimore v. Safe Deposit and Trust Co., 97 Md. 659 , it was decided that property held in trust should be treated, for purposes of taxation, as belonging to1 the beneficiary. In Hunt v. Perry, 165 Mass. 287 , where the question related to the taxability in Massachusetts of the interest of persons residing there in a Maine trust estate, under a statute similar in effect to the one with which we are here concerned, the Supreme Judicial Court of Massachusetts said: “The statute under consideration rests on the ground that the cestuis que trust residing here have a beneficial interest in the trust fund which is valuable, and that they are in effect the equitable owners thereof.

An interest of this kind is property, which the Legislature may subject to taxation. * *■ “The defendants contend that the statute, if such is its true construction, is unconstitutional. This argument rests on the ground that the property is situated out of the state; that the beneficial interest of a cestui que trust is nowhere else made taxable; and that this statute selects for taxation a kind of interest not otherwise taxable, and so imposes a tax which is disproportionate. This argument, however, is met by the suggestions already made, that the cestui que trust is here, and his ownership or title is here, namely, the right to the income of the trust fund. The fact that the corpus of the trust fund is held by trustees who live elsewhere, and who hold under a will proved and allowed elsewhere, does not take away the power of the Legislature to subject the interest of the cestuis que trust to taxation here, if they live here.” The principle of that decision was reaffirmed in Maguire v. Tax Commissioner, 230 Mass. 503 .

The court was there considering' and upholding an income tax, but the existence of a taxable property interest of the Massachusetts beneficiary in a trust estate administered in Pennsylvania was definitely recognized. It was said in the opinion: “The trus ²⁹ tee in Pennsylvania holds simply the legal title. He is possessed of the property in question solely for the benefit of the cestui que trust. The latter ‘is the real,