Rhode Island Hospital Trust Co. v. Doughton, 270 U.S. 69 (1926)

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Rhode Island Hospital Trust Co. v. Doughton

No. 106

Argued January 11, 1926
Decided March 1, 1926
270 U.S. 69

ERROR TO THE SUPREME COURT

OF NORTH CAROLINA

Syllabus

1. Under the principle that the subject to be taxed must be within the jurisdiction of the state, applicable to a transfer tax as well as to a property tax, a state may not tax the devolution of property from a nonresident to a nonresident unless it has jurisdiction of the property. P. 80.

2. Inasmuch as the property of a corporation is not owned by the shareholder, presence of such property in a state does not give that state jurisdiction over his shares for tax purposes. P. 81.

3. A North Carolina law purporting to tax the inheritance of shares owned by a nonresident in any corporation of another state having fifty percent or more of its property in North Carolina, the assessment of the shares as compared to their full value being in the same ratio a the value of the corporate property in the state to all the corporate property, held void as applied to shares owned by a resident and citizen of Rhode Island, and passing to his executor there, in a New Jersey corporation, where two-thirds in value of the corporation’s property was located in North Carolina, but where the corporation was not "domesticated" by reincorporation in North Carolina, and where there was nothing in the statutory conditions on which it began and continued business there suggesting that the shareholders thereby subjected their stock to the taxing jurisdiction of that state. P. 80.

187 N.C. 263 reversed.

Error to a judgment of the Supreme Court of North Carolina sustaining a tax on the inheritance of shares of stock.