wife imposed a duty on him to recover the property. As said by the court in the Byrnes case: "It makes no difference to equity whether the claim for relief is based upon an allegation of breach of duty or upon an allegation of an attempt by affirmative fraud to accomplish an unrighteous result"." Whether or not Melenky actually intended to defraud his wife, the result is the same. He had not merely a right to go into equity; he had a duty. In New Jersey, in a similar case, the court found a declaration of trust in order to give the wife her dower.10 If the father had conveyed the property to his son in view of marriage and then had married the plaintiff after his statement of ownership, the court would no doubt have allowed the plaintiff's inchoate right of dower to attach." Yet the court permits the plaintiff's right to be defeated by the accident of the father's infirmity and want. No fraud by father and son could have been more effective in producing this result.

In the Melen case there is a noticeable aversion to a finding of fraud in favor of the plaintiff's inchoate right of dower, but in the Byrnes case the court freely uses fraud as the open sesame to the wife's marital rights. The court in the latter case maintains as a general rule that the wife does not lose her inchoate right of dower in mortgaged premises where the foreclosure is expressly procured for that purpose. McLaughlin, J., in an able dissenting opinion, urges that the judgment and sale of themselves were not fraudulent. But the court meets his objection by quoting as the general rule that foreclosure expressly procured by the husband to defeat his wife's right of dower will be invalid for that purpose. The court cites three cases in support of its statement. In Munroe v. Crouse1 the court refused to divest the wife of her inchoate right of dower by a judgment procured for that purpose by a purchaser of the land. The defendant had been allowed to retain part of the purchase price on his agreement to use it to pay the outstanding mortgage. Though the court in

'At p. 220.

10Wildeman v. Wildeman, 98 N. J. Eq. 109, 130 Atl. 717 (1925).

"Allen v. Allen, 213 Mass. 29, 99 N. Ë. 462 (1912). In this case, the grantee was an innocent purchaser for value, so no recovery was allowed. The statement of ownership by the husband was made to the wife after the conveyance, and was held to be fraud. In the following cases, it was held to be fraud on the wife for the husband to convey the property prior to the marriage but after the statement of ownership upon which the wife relied: Deke v. Hunkemeir, 260 Ill. 131, 102 N. E. 1059 (1913); Dearmond v. Dearmond, 10 Ind. 191 (1858); Derry v. Derry, 74 Ind. 560 (1881); Jackson v. Landers, 134 Ind. 530, 34 N. E. 323 (1893); Bookout v. Bookout, 150 Ind. 63, 49 N. E. 824 (1898); Smith v. Smith, 6 N.J. Eq. 515 (1847). A secret conveyance in view of marriage to defeat the wife's dower right is fraudulent: Beechley v. Beechley, 134 Iowa, 75, 108 N. W. 762 (1907); Wallace v. Wallace, 137 Iowa, 169, 114 N.W.913 (1908); Swaine v. Perine, 5 Johns. 482 (N. Y. 1821), Pomeroy v. Pomeroy, 54 How. Pr. 228 (N. Y. 1875); Babcock v. Babcock, 53 How. Pr. 97 (N. Y. 1876), Youngs v. Carter, 10 Hun 194 (N. Y. 1877); Arnegaard v. Arnegaard, 7 N. D. 475, 75 N. W. 797 (1898); Ward v. Ward, 63 Ohio St. 125, 57 Ñ. E. 1095 (1900). The fraudulent intent need not be directed against any particular person, but may be against any one whom the grantor marries: Higgins v. Higgins, 219 Ill. 146, 76 N. E. 86 (1905); Jarvis v. Jarvis, 286 Ill. 478, 122 N. E. 121 (1919); Beechley v. Beechley, supra. 1259 Hun 248, 12 N. Y. Supp. 815 (N. Y. 1891).

clines toward the view expressed in Byrnes v. Owen, it says:13 "The judgment may be sustained on other grounds... that the defendants held part of the purchase price in trust to pay off the mortgage, and it became their duty to do so". Thus there was a strong duty on the defendant to pay off the mortgage, but there is no duty on a husband to pay off the mortgage on property in order to protect his wife's right.14

15

Two Massachusetts cases are cited by the court in support of the doctrine that a foreclosure sale procured by the husband to defeat his wife's inchoate right of dower, once it has attached, is fraudulent and does not defeat her marital right. The doctrine seems to be well established in Massachusetts, because without it a husband could procure such a foreclosure sale, have the land bought for him by a third party acting under a valid, written trust agreement, and thus defeat the wife's marital rights and be protected by law.16 To prevent this the law making such foreclosure invalid as to the wife's inchoate right of dower is a practical necessity in Massachusetts. As evidence of this basic distinction between the law of the two states, Massachusetts declares that to apply the rule regarding such foreclosure by the husband, the latter must have had at some time legal seisin of the property," thus refusing to recognize dower in equitable estates. The same result can be reached in the Byrnes case by allowing the plaintiff dower in her husband's equitable estate18 without resorting to the rule making the foreclosure invalid. Even in New York, the application of the rule regarding foreclosure by the husband merely assures further the jealous protection of the wife's right of dower accorded by the common law.

It has been suggested that there is little difference between an equitable right and an equitable estate. Where one has an equitable right to property, and where a duty rests upon that person in favor of another to secure the property, it seems that equity, by looking at the substance rather than at the form, would enforce that right and not leave it to the option of the owner of the right. The court, in overlooking the husband's promise in the Melen case, overlooked the duty to enforce his right. It has also been suggested that the court might have enforced the duty of the husband in the Melen case

13 At 255.

14Walker v. Walker, 66 N. H. 390, 31 Atl. 14 (1890); Durnherr v. Rau, supra note 3; Phelps v. Phelps, 143 N. Y. 197, 38 N. E. 280 (1894); Nichols v. Park, 78 App. Div. 95, 79 N. Y. Supp. 547 (1st Dept. 1903); Poillon v. Poillon, 90 App. Div. 71, 85 N. Y. Supp. 689 (1st Dept. 1904).

15Gilson v. Hutchinson, 120 Mass. 27, 32 (1876); Brownell v. Briggs, 173 Mass. 529, 532, 54 N. E. 251 (1898).

16 Massachusetts does not allow dower in equitable estates: Reed v. Whitney, 7 Gray, 533, 537 (1856); Lobdell v. Hayes, 4 Allen (Mass.) 187 (1862); Simonds v. Simonds, 112 Mass. 157, 164 (1873); Seamon v. Harmon, 192 Mass. 5, 78 N. E. 301 (1906).

17Seamon v. Harmon, supra, note 13, at 7: and note 13.

18 New York allows the wife's right of dower to attach to equitable estates of the husband: N. Y. Cons. Laws (1909) c. 52 § 190; Mullin v. Mullin, 1119 App. Div. 521, 104 N. Y. Supp. 323 (2nd Dept. 1907); Lugar v. Lugar, 160 App. Div. 807, 146 N. Y. Supp 37 (1st Dept. 1914); Melenky v. Melen, 233 N. Y. 19, 134 N. E. 822 (1922).

by a decree of reconveyance of the property.19 Thus automatically the plaintiff's inchoate right would attach.20 In its failure to do so, the court allowed the son to enrich himself at his father's and foster mother's expense. His father's consent to the compromise, it is evident, is adequate defense to the fraud against him, but that does not condone the fraud of either in defeating the wife's right. There is no doubt that had the father been guilty of fraud, conveying the estate to his son after his statement of ownership to the wife, the latter could have recovered.21 But the fact that he had only an equitable right when he said he had the full legal title is held not to be a fraud on the wife.

The plaintiffs in the Melen and the Byrnes cases were entitled to recover. They might have recovered on the same theory of a right in the husband to have the estate plus a duty upon him to get it. It is submitted that allowing dower to attach to an equitable right of the husband where it is accompanied by a duty upon him to enforce the right in order to protect the wife's dower would secure a just result and would be a justifiable extension of the general rule allowing dower in equitable estates.22

Harry J. Pasternak.

Taxation: Corporations: Transfer tax on non-resident decedent's shares in foreign corporation. The right of a state to tax a nonresident decedent on shares of a foreign corporation owning real estate within the state and doing business therein, has been the subject of considerable litigation within the last ten years. Within the short space of four months during this past year, three courts,1 among them the Supreme Court of the United States, have declared such a tax law invalid. Two of the courts held the law to be without due process and in violation of the Fourteenth Amendment. One court, the New York Court of Appeals, in the decision of In re Gates' Estate. 243 N. Y. 193, 153 N. Ē. 45 (1926), held, in accord with

19(1921) 7 CORNELL LAW QUARTERLY 171.

20N. Y. Cons. Laws (1909) c. 52 § 190.

21See supra, note 9.

22 McCarthy v. Jennings, 233 Ill. App. 310 (1924), Plaintiff's father-in-law devised realty to plaintiff's husband. The husband and defendant Jennings combined to defeat plaintiff's right of dower. They procured the father, on his death-bed, to convey to Jennings by absolute deed without consideration. Jennings later conveyed to another who knew of the fraud. Held, that the wife was entitled to dower. The wife's dower attaches where the husband could have secured a conveyance in equity. See also: Nicoll v. Ogden, 29 Ill. 323, (1862); Stow v. Steel, 45 Ill. 328 (1867); Taylor v. Kearn, 68 Ill. 339 (1867).

1Rhode Island Hospital Trust Co. v. Doughton, 46 Sup. Ct. 256 (March 15, 1926); Bardon v. Hubbs, 246 Pac. 770 (Ariz., June 2, 1926); In re Gates' Estate, 243 N. Y. 193, 153 N. E. 45 (July 9, 1926). The facts of the three cases are nearly identical. The New York decision however makes no mention of the Supreme Court decision and does not expressly say that the tax is without due process and unconstitutional, but bases the invalidity of the tax on a "neutralizing limitation" of the statute to the effect that the tax shall be on "property represented by such shares, consisting of real property in New York." Since the property represented by such shares was held not to consist of the corporate realty, the tax was of no effect.

the overwhelming weight of authority, that such a tax could not lawfully be imposed.

The New York law levying such a tax first went into effect in 1915.2 It taxes non-resident decedents when the transfer is by will or intestate law of shares of stock in any corporation, foreign or domestic where the property represented by such shares of stock consists of real property which is located wholly, or partly, within the state. The tax is proportioned as the value of the realty in New York bears to the entire property of the corporation.

In re McMullen's Estate, 114 Misc. 505, 187 N. Y. Supp. 248 (Surr. 1921) was the first case to be decided under the new law in New York. The Surrogate's Court, where the case was first tried, upheld the tax. It said that the tax was not limited simply to corporations engaged exclusively in holding real estate Under the facts of the case the certificates of stock were actually located in New York at the time of the non-resident decedent's death, and the court said were therefore properly taxable The court went further and by way of dictum said that the shares would be taxable regardless of their physical situs.

The Appellate Division reversed the decision3, but declared the tax law valid as to strictly real estate holding corporations. Because the foreign corporation was engaged in the business of dredging and the holding of real estate was purely incidental thereto, the tax was not upheld. After reading the opinion of the court, it is difficult to see any grounds for the exception. The opinion reads as follows: "the state cannot enforce a tax upon the transfer of shares of stock of a foreign corporation owned by a non-resident decedent where neither the corporation nor the owner is within its jurisdiction" The Court admits that the foreign corporation itself would be subject to a tax on its property within the state because the property constitutes a res over which the state has jurisdiction, but continues "this jurisdiction would not apply to a non-resident stockholder of such a foreign corporation for the reason that he is not an owner of the real estate." The reasoning of the court would seem to be inclusive of real estate corporations as well as others. The possibility of upholding the tax due to the fact that the certificates of stock were actually in New York at the time of the non-resident decedent's death was not considered because the court held that the law was intended to be comprehensive and based solely on the presence of corporate realty within the state and not on the presence of the certificates. The decision was affirmed by the Court of Appeals with no opinion.5 In re Gates' Estate declares this tax law invalid. The Court of

2L. 1915, c. 664, sec. 1. The case noted was based on the law as in effect in 1918. See Tax Law (Cons. Laws, c. 60) sec. 220, subdiv. 2-between 1916 and 1925.

Matter of McMullen, 199 App. Div. 393, 192 N. Y. Supp. 49 (1st Dept. 1922). Ibid. at p. 399.

Ibid. 236 N. Ý. 519, 142 N. E. 266 (1923).

Supra, note 1. The court, In re Gates' Estates says: "The state of New York might not tax the transfer of shares in foreign corporations owned by a nonresident. It might have taxed the transfer of shares of the New York corporation. It might have taxed the transfer proportionately. It has not done so. It has

Appeals stresses the fact that a condition precedent to the imposition of the tax, in the words of the statute, is that "the property represented by such shares of stock *** consists of real property in the state." But neither the bonds nor the shares of stock represent any property other than the intangible rights of a bondholder or a shareholder. The property in a bond is a bare right to collect and the property in stock is a right to participate in the management, to share in the earnings as declared in dividends, and upon dissolution of the corporation to share in the distribution of assets after all debts have been paid. Neither the bond nor the stock represents any interest in the real estate of the corporation. The tax, therefore, fails from a very weakness in its foundation. Urged to uphold the tax by construing the stockholders as the owners of the corporate property, the court refused to do so.

Only one state court of highest jurisdiction has upheld such a tax as was attempted to be imposed here. North Carolina did so, but its decision was reversed by the Surpeme Courts. The states of Arizona', Idaho, Illinois", Massachusetts, Montana13, Ohio, Oklahoma15 and Wisconsin16 have all expressly denied such a power to tax. The tax being discussed is an inheritance tax, not upon the corporate property nor on the stockholder's property in the shares of the foreign corporation, but on the right of the stockholder to transmit the property upon his death. "Jurisdiction for the purpose of imposing a succession tax exists only when the exercise of some essential privilege incident in the transfer of the title depends for its legality upon the law of the state levying the tax." The state in which the decedent owner is domiciled and the state in which the corporation is created have been the only states so far entitled to tax under this rule. Where the shares of a corporation created in B state were owned by a decedent domiciled in C state, it is difficult to see what effect the laws of state A have on the transfer of such

taxed the transfer of stock in all nonexcepted corporations, foreign or domestic, only so far as the property represented by such shares consists of real property within the state. It has adopted this classification in order to reach the transfer of shares in all corporations, foreign or domestic" (Italics are the writer's).

"Rhode Island Hospital Trust Co. v. Doughton, 187 N. C. 263, 121 S. E. 741 (1924).

Ibid. 46 Sup. Ct. 256 (1926).

'Bardon v. Hubbs, 246 Pac. 770 (Ariz. 1926).

10State v. Dunlap, 28 Idaho 784, 156 Pac. 1141 (1916).

"People v. Griffith, 245 Ill. 532, 92 N. E. 313 (1910); People v. Dennett, 276 ibid. 43, 114 N. E. 493 (1916); People v. Cuyler, ibid. 72, 114 N. E. 494 (1916); People v. Blair, ibid. 623, 115 N. E. 218 (1917); Oakman v. Small, 282 ibid. 360, 118 N. E. 775 (1918).

12 Welch v. Treasurer and Receiver General, 223 Mass. 87, 111 N. E. 774 (1916). 13 State v. Walker, 70 Mont. 484, 226 Pac. 894 (1924).

14Cassidy v. Ellerhorst 110 Ohio St. 535, 144 N. É. 252 (1924).

15 In re Estates of Harkness, 83 Okla. 107, 204 Pac. 911 (1921).

16Shepard et al. v. State 184 Wis. 88, 197 N. W. 344 (1924). See also Tyler v. Dane County, Wis., 289 Fed. 843 (1923). For general authorities, see GLEASON AND OTIS, INHERITANCE TAXATION, 4TH ED. (1925) pp. 558-563; note in 23 Mich. L. Rev. 272.

17 Welch v. Treasurer and Receiver General, supra note 12, at 92, 111 N. E. at 777.