The Hawaiian gazette. [volume] (Honolulu [Oahu, Hawaii]) 1865-1918, 1909-08-24
INHERITANCE
TAX LAW VALID

cided yesterday by the Supreme Court
in favor of the Territory, the con
stitutionality of the Act being upheld
The case upon which the decision is
rendered is that of the estate of Mary
Dame Hall, which came before the Su.
preme Court on appeal from the de.
cree of Circuit Judge Robinson, rem.
dered some weeks ago.
Had the court held the law uncon-
stitutional, it would have meant not
only the loss of large revenue to the
Territory in the future, but also that
large amounts in inheritance taxes
which have already been collected
would have to be refunded. Attorney
General Hemenway, consequently, is
very much pleased at his victory in the
matter. The amount involved in the
case at issue was $4,000, which will
now have to be paid into the treasury
of the Territory.
Following is the opinion of the
court:
The inheritance tax statute claws
of 1906 Act 1922 does not violate the
United States Constitution.
Under the inheritance tax statute
shares of stock in domestic corpora
dent, are property within this Terri
tory and subject to the provisions of
the act.
Opinion of the Court by Wilder, ].
Mary Dame Hall died testate in New
Jersey leaving large amount of prop
erty. Her will having been admitted
to probate in that state letters of an
cllary administration with the will an
nexed were granted to S. NJ. Damon
by Circuit Judge of the First Circuit
to administer upon certain amount
Of cash in this Territory and shares
of stock in number of domestic cor
porations, upon the transfer of which
property under the will an inheritance
tax was assessed
The administrator having appealed
from the decree assessing the tax, two
questions are presented for considera-
ton, namely, 1) whether the inheri-
tance tax statute (Act 102, s. l.. 1905),
is unconstitutional in that it is con-
trary to the fifth and fourteenth
amendments to the constitution, and,
if not, (2) whether shares of stock in
domestic corporations owned by nom
resident decedent are subject to the
provisions of the statute.
The first point is that the statute is
unconstitutional because it provides for
a classification which is claimed to be
arbitrary and discriminative, the clas-
sification being that in the case of GER
tain relatives the tax is two per cent
on the value of the property received
in excess of $1,000. while in all other
cases the tax is Ave per cent. on the
value of the property in excess of
$500 In our opinion the classification
is a reasonable one and the act is
valid. See Magoun V. I'll. Trust
Savings Bank. 40 U. s. 2S3; Campbell
V. California, U. S. 81; Board of Edu
cation V. Illinois. 203 U. S. 553; Bill
lipgs " Illinois, 1ss U. s. 81.
The second and main contention is
that shares of stock in domestic cor
porations owned by nonresident dece-
dent are not property within this Ter
ritory and consequently not subject to
the provisions of the statute. Section
of the act provides that GAN prop
erty. which shall pass by will or by
the intestate laws of this Territory,
from any persons who may die seized
or possessed of the same while a resi-
dent of this Territory, or which, being
within this Territory, shall so pass
from any person who may so die while
not a resident of this Territory shall
be subject to the tax.
The question. in brief, is whether
the shares referred to are property
within this Territory. That the shares
are property is of course clear and is
conceded. Counsel for the appellant
also comedies the power of the legis.
lature to provide for a tax on a success
sion to such shares of stock but in
sists that it has not done so. The
fiction that personal property has its
situs at the domieil of its owner is not
relied on, as it is conceded that the |
act covers personal property of non
resident which is tangible and is physi |
cally situated within the Territory. 1t |
is argued that shares of stock are in
tangible property and have no physical |
situs whatever in the absence of
provision to the contrary in the act. |
In section "a of the act "property''
is defined to mean "the real and per.
sonal property or interest therein of |
the testator, intestate, grantor, bar
gainor, vendor or donor passing OF
isees, heirs, next of kin, grantees, |
NbhNN03 NNhhtNNs VI SuNttHSuIs anu Suiill
include all personal property within or
without the Territory" This deAni
tion includes intangible as well as
tangible property.
In in re Bronson. $50 n. Y. !, it was
held that the transfer of shares of |
stock in corporations incorporated nm
der the laws of that State held by a
nonresident decedent was subject to |
taxation under the New York statute,
which provided for tax on the trans.
fer of property within the State when
the decedent was a nonresident at the
time of his death. The reasoning by |
which that conclusion was reached was
that n share of stock was but an un-
divided interest in the property of the
corporation, and that it had tangible |
and visible existence in the State where
the corporation existed and had its
property. That case has been followed
in number of later decisions.
In state v. Dalrmyple, 20 Md. 294, 3 |
J., Il, \. 372, the court had no hesitation