#### The President and Fellows of Harvard College et al. *v.*The State of Ohio.

*Taxation of inheritances*— Section 7, *Article XII, Constitution, 1912*— “Estates” *construed*— Exemptions—Public *institutions of learning*— Section *5332, General Code (9k O. L., 101)*— In*stitutions located outside Ohio,*

1. Section 7, Article XII of the Constitution as amended in 1912, authorizes taxation and exemptions of estates received or succeeded to. The word “estate” in the last clause thereof imports the same meaning as the word “estates” in the first clause of the section. '

2. Neither in that section nor elsewhere in the constitution is there a legislative limitation prohibiting the exemption of “public institutions of learning” from such succession tax. Section 5332, General Code (94 O. L., 101, Sec. 1), is a valid exercise of legislative power.

3. The clause, “Public institutions of learning,” designated in said Section 5332, General Code, embraces institutions located within or without the state.

(No. 16928

Decided December 29, 1922.)

Error to the Court of Appeals of Hamilton county.

Annie L. Dexter died February 25, 1916, leaving a residuary legacy of $73,478.97 to Harvard College, a public institution of learning, located outside of the state of Ohio.

The probate court found that this sum was subject to a collateral inheritance tax of $3,673.95. An appeal was taken to the common pleas court, which found the legacy was not subject to the collateral inheritance tax. The case was taken, on error, to the *304court of appeals, and that court reversed the common pleas court and affirmed the judgment of the probate court, holding that the bequest was subject to the collateral inheritance tax named. Error has been prosecuted to this court seeking a reversal of the judgment of the court of appeals.

*Mr. Charles B. Wilby*and *Mr. Elliott H. Pendle*ton, for plaintiffs in error.

*Mr. Louis H. Capelle,*prosecuting attorney, and *Mr. Albert H. Leeker,*assistant prosecuting attorney, for defendant in error.

*Mr. John 0. Price,*attorney general; *Mr. Ray Martin; Mr. C. D. LayUn; Mr. John M. Parks', Mr. Cuy W. Mallon; Mr. William Worthington; Mr. Frank 0. Suire; Mr„ Robert A. Taft; Messrs. Square, Sanders d&. Dempsey*and *Messrs. Booth, Keating, Pomerene (& Boulger, amici curiae.*

Jones, J.

The first question confronting this court is whether Section 7, Article XII of the Constitution as amended in 1912, confers upon the legislature the right to tax, or to exempt from taxation, the estate of the decedent, or whether the power relates to exemptions laid upon estates received or succeeded to by the' beneficiaries.

At the outset it must be conceded that if the exemption referred to in that section relates to the former, that is, the decedent’s estate, ;the present inheritance tax laws of the state, Sections 5331 to 5334, inclusive, General Code, are void, since they do not carve the exemptions from the decedent’s estate, but from the amounts severally succeeded to by beneficiaries. Section 7, Article XII, reads as follows: *305“Laws may be passed providing for the taxation of the right to receive, or to succeed to, estates, and such taxation may be uniform or it may be so graduated as to tax at a higher rate the right to.receive, or to succeed to, estates of larger value than to estates of smaller value. Such tax may also be levied at different rates upon collateral and direct inheritances, *and a portion of each estate not exceeding twenty thousand dollars may Toe exempt from such taxation*

It will be observed that the words “estate” and “estates” are used four times in the section quoted. The question here is whether the word “estate,” as used in the last clause, has the same meaning as “estates” employed in the first clause of the section. Upon this question several briefs have been filed in the case, some *amici curiae,*in the endeavor to assist the court in determining the question involved. If the word “estate” in the last clause of that section of the constitution has the same meaning as when used in the first clause, undoubtedly discretionary power is given the General Assembly to carve the exemption entirely from the amount received or “succeeded to” by the beneficiaries. In aid to a proper construction of this feature of the case we may advert to the fact that the people of Ohio adopted Section 2, Article XII of the Constitution, at the same time. they approved .Section 7, Article XII. Section 2, Article XII, relates to property taxation and exemptions, and is substantially similar to that which theretofore existed except that it permits an exemption of $500 personal property instead of the sum of $200 theretofore permitted. Section 7, Article XII, however, specifically covers a *306new field of taxation. This article relates entirely to the *taxation of inheritances,*and, when submitted to the people of the state for approval, the form of ballot contained that statement.

An examination of the first clause of Section 7 discloses that the use of the word “estates” undoubtedly comprehended such estates as might be received or succeeded to. Twice in the first clause this word was used in that sense. Having thus employed the term as relating to the *inheritance*or estate succeeded to, a construction of the entire context of the section would seem to demand that the word “estate,” employed in the last clause, be given the same sense as in the former. In 1 Story on the Constitution, Section 400, the author, discussing the various rules of interpretation, quotes Mr. Blackstone upon that subject to this effect:-“If words happen to be dubious, their meaning may be established by the context, or by comparing them with other words and sentences in the same instrument.” Some stress is laid upon the fact that in the discussion of this phase of the quoted section, one Mr. Colton, a member of the Constitutional Convention, stated that in his opinion the exemption reached the decedent’s estate and not the estate received by an heir. While the debates in the Constitutional Convention may assist in determining the meaning of language of doubtful import used in the Constitution, and in the removal of doubts therefrom, they sometimes prove to be unsafe guides in the interpretation of the instrument, as the latter should be construed according to its import as it may have been presumed to have been understood by the people who ratified it.

*307The legislative branch of the government, as shown by the enactment of contemporaneous legislation, has construed it otherwise, that the exemption in question should be taken from the estate succeeded to by the beneficiary. It is true that this legislation has not been acquiesced in for a long period of time, yet for some ten years this inheritance tax exemption law has been in effective operation and estates have been administered accordingly. And, since the validity of these inheritance tax-exemption laws is attacked for unconstitutionality, we may be permitted to quote the language employed by Judge Eanney in *Cincinnati, Wilmington & Zanesville Rd. Co.*v. *Commissioners of Clinton County,*1 Ohio St., 77, 82, and *Exchange Bank of Columbus*v. *Hines,*3 Ohio St., 1, 52, as follows: “The presumption is always in favor of the validity of the t law; and it is only when manifest assumption of authority and clear incompatibility between the constitution and the law appear, that the judicial power can refuse to execute it. Such interference can never be permitted in a doubtful case.” If the term “estate” employed in the last clause of Section 7, Article XII, is ambiguous, when taken in connection with the context of that section, and in view of the fact that the subject-matter under consideration was taxation and exemption of inheritances of estates succeeded to, we employ such a construction as will hold the tax inheritance law valid and will give it effective and practical operation. In view of the fact that the number of direct or collateral heirs varies, it is comprehensible why the inheritance tax should be laid upon the size of the *308share received, rather than upon the property to be divided.

The particular section of the code under attack for its claimed invalidity, and -which was in force when this estate was administered, is Section 5332, General Code (94 O. L., 101, Sec. 1), which reads as follows: “The provisions of the next preceding section shall not apply to property, or interests in property, transmitted to the state of Ohio under the intestate laws of the state, or embraced in a bequest, de ■ vise, transfer or conveyance to, or for the use of the state of Ohio, or to or for the use of a municipal corporation or other political subdivision thereof for exclusively public purposes, or public institutions of learning, or to or for the use of an institution in this state for purpose only of public charity or other exclusively public purposes. The property, or interests in property so transmitted or embraced in such devise, bequest, transfer or conveyance shall be *exempt*from all inheritance and other taxes while used exclusively for any of such purposes.”

Under Schedule 20, adopted as part of the Constitution in 1912, this law continued in force until amended or repealed, if not inconsistent with the amendments to the constitution then adopted. In his argument to sustain the validity of the statute, the attorney general claims that the quoted section was in fact not an exemption but an exclusion from the operation of the inheritance tax law. The last clause of the section, however, discloses a legislative intention that the transfers named therein should *“be exempt from all inheritance taxes”*while used exclusively for the purposes named. Whether the *309general assembly had theretofore a general grant of power to tax, under Section 1, Article II of the Constitution, is unimportant, for Section 7, Article XII, specifically authorized the taxation of inheritances, or what we have construed to be estates succeeded to by the beneficiaries.

Plaintiff in error seeks the entire exemption for the reason that it is a “public institution of learning, named in the section quoted. ’ ’ A question therefore arises whether the legislature could select such an institution and exempt it from the obligation of paying a succession tax. And certainly if the legislature had no power to exempt this institution, neither could it exempt bequests made to the state, or its political subdivisions or charitable institutions, -under the terms of that section. Under the general provisions of the constitution the legislature had full power to make a classification, if uniform; provided, of course, the basis of classification was not an arbitrary one. *(City of Xenia*v. *Schmidt,*101 Ohio St., 437.) Certainly the classification made in Section 5332, General Code, separating public, charitable and educational institutions, was not unreasonable or arbitrary in view of the benefits accruing to the public as distinguished from those of a private nature. The state had always favored that feature as a basis for classification.

Could the state, in the exercise of this power, relieve this institution entirely from the tax?

Section 7 permitted a wide discretion in the legislature, by use of the language “laws may be passed” providing for taxation and exemptions therein named. The right to exercise both therefore sub*310sists, and we must look elsewhere in this section for a legislative limitation of that power. An examination discloses that instead of a limitation, the grant is general. It provides that taxation may be uniform or graduated according to the value of the estate succeeded to. Different rates may be imposed upon direct and collateral inheritances. Section 7 gave the legislature discretionary power to exempt a “portion of each estate not exceeding twenty thousand dollars.” There was no limitation within the maximum embraced. The legislature was empowered to exempt a full sum, a portion thereof, or in its discretion no amount whatever. Having thus provided the specific maximum limitation, we may not add another to the effect that the legislature cannot wholly exempt a class from the succession tax if the class exempted is selected upon a reasonable basis.

In our opinion, therefore, the classification in which this institution of learning was placed was a proper one, and the legislature was authorized wholly to exempt it from the succession tax. By grammatical construction, punctuation and juxtaposition institutions embraced under the clause “public institutions of learning” are not confined to those located in this state. To so hold would be to give the clause a construction in violation of its plain import, and to attach to it a judicial construction not warranted by the statute. Our conclusion is that under Section 7, Article XII, aforesaid, the laws therein authorized touching taxation and exemption refer to the taxation and exemption of inheritances or estates succeeded to; that the legislature made an authorized classification in Section 5332, General Code, and that the legislature in its discretion may relieve such an in*311stitution from the succession taxes; that the statute in question, in force at the time of the administration of this estate, exempted the plaintiff in error, as a public institution of learning, whether located within or without the state.

The judgment of the court of appeals will therefore be reversed, and that of the common pleas affirmed, and the cause remanded to the probate court for further proceeding according to law.

*Judgment reversed.*

Hough, Robinson, Matthias and Clark, JJ., concur. Marshall, C. J., and Wanamaker, J., dissent.

Wanamaker, J.,

dissenting. I dissent from the judgment of the majority in this cause, and the,reasons therefor, upon the following grounds.

It is conceded that the particular constitutional provision involved is Section 7, Article XII of the Constitution of Ohio, as adopted in 1912. That section reads:

> “Laws may be passed providing for the taxation of the right to receive, or to succeed to, estates, and such taxation may be uniform or it may be so graduated as to tax at a higher rate the right to receive, or to succeed to, estates of larger value than to estates of smaller value. Such tax may also be levied at different rates upon collateral and direct inheritances, and a portion of each estate not exceeding twenty thousand dollars may be exempt from such taxation.”

It is apparent that the word “estate” appears four times in this section. The majority, in the first *312paragraph of the syllabus, hold that, “The word ‘estate’ in the last clause thereof imports the same meaning as the word ‘estates’ in the first clause of the section. ’ ’ That is, the word ‘ ‘ estate, ’ ’ wherever it appears in Section 7, Article XII as adopted in 1912, has the same meaning.

I agree, with the qualification that the context itself clearly shows that the one subject-matter dealt with in that section of the constitution is the property left by a deceased person to be administered either according to his will or agreeable to the law of distribution. The first part of the section obviously relates only to a portion, a moiety, a fractional part of the whole estate, such as a legacy, a devise, or bequest, while in the last clause, as well as in the next preceding clause, the word “estate” is used as an entirety. Yet, in substance, the word “estate” as used in Section 7 relates to the decedent’s property before distribution.

For the purpose of this argument, however, I shall accept and adopt the view of the majority as to the word “estate” being identical throughout Section 7. If this be sound, then “Harvard College’s right to receive or to succeed to estates” must be subject to the last clause of that section, reading “and a portion of each estate not exceeding twenty thousand dollars may be exempt from such taxation.”

It will be observed that the statute in question (Section 5332, General Code), under which the exemption is claimed, is found in 94 Ohio Laws, 101, enacted before the adoption of the constitutional amendment of 1912. By virtue of the express sched • ule of the constitution, as well as by the implied rule of law governing all statutes in effect at the time of *313the adoption of any new constitutional amendment, in so far as such statute is in conflict with the later constitutional amendment the statute must fall.

This elementary doctrine has been too frequently announced by this court to require any citation, and the majority opinion admits the soundness of this contention as to the necessity of repeal wherever the old statute and the new constitution conflict.

The old statute (Section 5332, General Code; 94 O. L., 101) under which Harvard College claims exemption, so far as pertinent, is as follows:

> “The provisions of the next preceding section shall not apply to property, or interests in property, transmitted to the state of Ohio under the intestate laws of the state, or embraced in a bequest, devise, transfer or conveyance to, or for the use of the state of Ohio, or to or for the use of a municipal corporation or other political subdivision thereof for exclusively public purposes, or public institutions of learning # # *. The property, or interests in property so transmitted or embraced in such devise, bequest, transfer or conveyance shall be exempt from all inheritance and other taxes while used exclusively for any of such purposes.”

I candidly concede the validity of that statute before the constitutional amendment of 1912 here in question. Prior to that amendment the question of exemption, or exclusion, or exception, by whatsoever name called, was one for. the legislature.

But after the amendment, the legislature was by the constitution limited to “a portion of each estate not exceeding twenty thousand dollars may be exempt from such taxation.”

*314Ael elementary rule of construction recognized by substantially all courts, as well as text-writers, is that the federal constitution is primarily a grant of power, and, secondarily, a limitation upon power; while state constitutions are primarily limitations of power, and secondarily grants of power.

It is obvious in this case that the sovereign people of Ohio, through their political will dealing with the subject of exemptions from such taxation, have placed a limit upon the legislative discretion, beyond which the legislature may not go. Else what could-be the purpose or effect of the constitutional limitation?

It is self-evident that the doctrine of uniformity in taxation, taxation upon all property equally, has been the primary and paramount doctrine in the principle of Ohio taxation. Exceptions, exemptions, and the like, are not favored in the law, and are therefore to be strictly construed; especially after general words which would naturally and necessarily include the exception if the exception were not expressly exempted from the operation of the law.

Layman as well as lawyer reading this provision of the constitution would unhesitatingly say that the legislature may pass an estate tax, but when they undertake to apply it they must apply it equally to all estates and to each and every part thereof, save and except they may exempt “not exceeding twenty thousand dollars. ”-

By this construction, as used in this case as a principle of statutory and constitutional interpretation, general assemblies may, by the use of appropriate words as an exception or exclusion, instead of the exact literal word “exemption,” thus permit a stat*315utory provision to defeat the plain, palpable constitutional provision.

I protest against such skin-deep superficialities. What a constitution exempts, a statute may not include, and what a constitution includes, a statute may not exempt, else the constitution is hot the paramount, sovereign law.

It is an elementary rule of legal construction applicable to a new statute, and especially to a new constitutional provision, that in order to obtain a clear, correct and comprehensive view of the changes contemplated by the new law- it is necessary to first consider the state of the old law. The old Blackstonian rule of the old law, the mischiefs thereunder, and the provisions of the new law for the correction of the same, are always essential to correct interpretation and application of the new order.

Section 5331, General Code (94 O. L., 101), stated the old law under the Constitution of 1851, and Section 5332 specified the exemptions under such statute, among which exemptions the following should be noted:

1. The succession to any property passing to or for the use of the state of Ohio.

2. Or for the use of a municipal corporation or other political subdivision of the state, for exclusively public purposes.

3. Public institutions of learning.

4. Property or interests in property transmitted to or for the use of an institution in the state for purposes only of public charity, or other exclusively public purposes.

It will be observed that these four classes are total exemptions under the old law of 1900, that had -been *316in force for twelve years or more prior to the Constitution of 1912.

Now, with that state of the law before the constitutional convention and before thé people of Ohio at the time of the election in September, 1912, the new amendment relating to taxation, and especially Section 7, Article XII, was adopted.

I contend that by this Section 7 they wiped out entirely all total exemptions such as enumerated in these four classes. With the subject of exemptions before them, as is shown by the language of the section, it is to be presumed that the constitutional fathers said upon that subject what they wanted to say, and when they defined the exemption that should be allowed they meant it as a restrictive definition beyond which the general assembly might not go.

Had the members of the constitutional convention wanted to exclude public charity, public institutions of learning, or any political subdivision of the state, or any other beneficiary, would they not likely have enumerated such beneficiary in connection with the subject of exemptions? Instead of that, all the. exemption they allowed or permitted, as to present and future legislation, is expressed in Section 7, “and a portion of each estate not exceeding $20,000 may be exempt from such taxation.”

Now it must be conceded that this $20,000 limitation is a limitation as to what may be exempt as to each particular inheritance by devise, legacy, trust, etc., in which no more than $20,000 could be exempted by the legislative act.

Or, such limitation must apply to the estate as a whole, as an entirety, in which event the whole estate *317would be subject to the tax, with the right of the legislature to exempt “not exceeding $20,000.”

Or, a third meaning is possible, which is that it means just nothing at all, and that is the force and effect that this court has given it.

The majority opinion uses this language:

> “And, since the validity of these inheritance tax-exemption laws is attacked for unconstitutionality, we may be permitted to quote the language employed by Judge Banney in *Cincinnati, Wilmington & Zanesville Rd. Co.*v. *Commissioners of Clinton County,*1 Ohio St., 77, 82, and *Exchange Bank of Columbus*v. *Hines,*3 Ohio St., 1, 52, as follows: ‘The presumption is always in favor of the validity of the law; and it is only when manifest assumption of authority, and clear incompatibility between the constitution and the law appear, that the judicial power can refuse to execute it. Such interference can never be permitted in a doubtful case.’ ”

This is a 100 per cent, sound proposition of law, but it bears 99 10/10 per cent, of non-applicability to this case. This statute falls, not because it was unconstitutional at the time of its enactment, but because it was repealed by the new constitutional amendment; and as Chief Justice Shauck soundly declared in the *Lynch case,*88 Ohio St., 71, even a constitutional schedule was not necessary to effect the repeal of a former statute in clear conflict with the new constitutional provision, but the old statute *ipso facto*was repealed by reason of the new constitutional provision where inconsistent therewith.

This is a case of putting the right boot on the wrong foot. It is a question not of unconstitution*318ality, but of repeal of tbe old statute, clearly intended by the new constitution dealing with exemptions.

Suppose the wording of the constitutional amendment dealing with exemptions contained in substance this language: “but no exemptions shall be allowed.” What then becomes of the old exemption statute here involved? Is there a lawyer or a layman who understands elementary English that would claim that an old exemption statute, in face of such later constitutional provision, could possibly remain in force?

Now, the new constitutional provision did not contain that language. It did allow some little latitude for exemptions; but limited that latitude to “a portion # * * not exceeding twenty thousand dollars may be exempt.”

The most that could possibly be claimed in favor of the Harvard College bequest, upon any possible statute, is that of the $73,000 they were to receive under the will $20,000 thereof was exempt, else this court writes $73,000 into the constitution of Ohio instead of $20,000. There is no alternative if ordinary language has any meaning or conveys understanding. And yet this court exempts the entire $73,000.

From the foregoing I hold that the whole exemption statute passed before the constitutional amendment, being clearly inconsistent with it because of its inconsistent and conflicting provisions, must absolutely fall, expressly and impliedly fall, because the schedule provided that prior inconsistent laws should be repealed.

Of course it was impossible for the legislature prior to 1912 to anticipate what constitutional changes might thereafter be made, and the very fact *319that the legislation in no wise recognizes the $20,000 limit on exemptions shows that the exemptions, not the tax, fall, and it is np to the general assembly if it sees fit to keep its exemptions within the new constitutional provisions.

I hold that this interpretation is not only clearly and convincingly consistent with the language itself, but I am confirmed in this respect by the constitutional debates, which are casually mentioned in the majority opinion.

On page 1506 of the constitutional debates, the following appears:

“Mr. Harris, of Ashtabula: As I understand, in the inheritance tax you provide for an exemption of $20,000. Is that an exemption to each heir, or each estate?

“Mr. Colton: Each estate, not each heir.

“Mr. Harris, of Ashtabula: What is meant by the language: ‘A portion of each estate not exceeding twenty thousand dollars in value may be exempted from such tax?’

“Mr. Colton:. I do not know that I can make it any plainer than that language. Not exceeding $20,-000 may be exempted from the estate, and the remainder must be taxed.

“Mr. Harris, of Ashtabula: The inheritance tax heretofore attempted has provided where the individual share exceeded such an amount it should be taxed.

“Mu. Colton: This is not worded in that way.

“Mr. Partington: Would the general assembly have the right to make a difference where there was a direct heir, or where there was one or ten heirs, in the setting aside of that portion?

*320“Mu. Colton: No.

“Mb. Partington: The legislature would not be empowered to do that under this provision?

“Mr. Colton: I think not, under this provision. Those are provisions in which the two reports concur, and I do not think it is necessary to go very carefully over those.” (Referring to both the majority and minority report.)

I might well submit this dissent upon the language of the amendment, together with the debates of the constitutional convention, which are entirely consistent with the language of the inheritance provision.