Source: https://supreme.justia.com/cases/federal/us/296/393/
Timestamp: 2019-04-26 02:34:06+00:00

Document:
1. Under the law of New Jersey, the review by the Supreme Court of the a decree of the Prerogative Court affirming a tax assessment is a judicial proceeding, as distinguished from an administrative one. P. 296 U. S. 400.
2. Upon appeal from a tax assessment, the Prerogative Court of New Jersey acquires jurisdiction not only to determine the tax due, but to take proceedings for its collection, and the docketing of its decree affirming a tax, gives it the effect of a judgment creating a lien and enforceable by execution. P. 296 U. S. 401.
3. The prohibition of § 265 of the Judicial Code against the granting by any federal court of an injunction to stay proceedings in any court of a State, embraces all steps that may be taken in a state court to collect a judgment, including not only execution, but ancillary proceedings in the court which rendered the judgment or some other, and it governs privies to the case in the state court, as well as the parties. P. 296 U. S. 403.
Appeal from a decree of the District Court of three judges denying a temporary injunction for want of jurisdiction in a suit to prevent collection of an inheritance tax in New Jersey.
was made for an interlocutory injunction; answers were filed, and the case was heard before three judges upon an elaborate record. But the injunction was denied for want of jurisdiction upon the allegations of the bill because of the prohibition contained in § 265 of the Judicial Code. [Footnote 2] Dorrance v. Martin, 12 F.Supp. 746. The cases are here on appeal.
The material allegations are substantially the same in the two suits: Dorrance died on September 21, 1930, at his residence in Cinnaminson, Burlington county, N.J., leaving a will in which he named his wife, two brothers, and the Camden Trust Company executors. On October 2, 1930, his will was, upon petition of the executors, admitted to probate in the Orphans' Court of that County; letters testamentary issued, and the executors have administered the estate ever since under the jurisdiction of that court. Their petition for probate, like the will, had recited that Dorrance's domicil was in New Jersey. On April 6, 1931, they filed with the Inheritance Tax Bureau of New Jersey their return as a basis for the assessment of the inheritance tax. The estate consisted almost wholly of bonds, stocks, and other evidence of title to intangible personal property, and these were then, and still are, located in New Jersey. On October 17, 1931, the Tax Commissioner, finding, upon evidence presented by the executors, that Dorrance was, at the time of his death, domiciled in New Jersey, assessed the amount stated as the tax on direct transfers payable under the New Jersey Transfer Inheritance Tax Act of April 20, 1909, c. 228, as amended.
there. In re Dorrance's Estate, 309 Pa. 151, 163 A. 303. No question under the Federal Constitution was presented. Certiorari was denied by this Court, 287 U.S. 660, 288 U.S. 617. In satisfaction of the judgment, the executors paid to Pennsylvania $14,394,698.88, and $104,278.03 as interest thereon, and they also gave a bond in the sum of $4,000,000 to pay additional amounts if, upon final determination of the federal estate tax, they should appear to be due.
In the suits at bar, the plaintiffs insist that the Pennsylvania judgment was in rem, and bound New Jersey and the defendants although they were not parties to that litigation; that the New Jersey courts and administrative authorities, in refusing to give effect to the Pennsylvania judgment holding that Dorrance was domiciled in the latter state, violated the full faith and credit clause of the Federal Constitution, and that, if they construed the New Jersey Transfer Inheritance Tax Act as applying to intangible property the situs of which was outside New Jersey, they violated the due process and equal protection clauses of the Fourteenth Amendment. The plaintiffs contend further that, if the Pennsylvania judgment is not in rem, the federal court is now free to ascertain the facts as to domicil and reach its conclusion independently of the prior decisions of the courts of the two states, and that the evidence introduced below establishes that Dorrance's domicil was in Pennsylvania.
had not passed from the administrative into the judicial stage. See City Bank Farmers Trust Co. v. Schnader, 291 U. S. 24; 293 U. S. 293 U.S. 112. But they assert that the proceedings in the Supreme Court of New Jersey reviewing by certiorari the final decree of the Prerogative Court (itself a judicial tribunal) were proceedings judicial in their nature, and that the stay sought is of proceedings pending in a court of New Jersey. The defendants contend also that the judgment of the New Jersey Supreme Court to which the executors were parties is res judicata as to the domicile of the deceased and as to the liability of the estate for the taxes assessed by New Jersey, and they set up other reasons why the relief prayed should be denied. We have no occasion to consider any of these defenses, since we agree with the District Court that it was without jurisdiction to grant the injunction.
"shall be personally liable for any and all such taxes until the same shall have been paid as hereinafter directed, for which an action of debt shall lie in the name of the New Jersey."
courts in proceedings strictly judicial. The power to "reverse or affirm, in whole or in part" does not imply that the court may exercise administrative discretion. Such power is a common incident of the judicial review of taxation. As the administrative proceeding of assessing the tax had ended when the Supreme Court granted its writ of certiorari, we have no occasion in this connection to enquire whether it had not already ended when the appeal to the Prerogative Court was allowed.
Third. The plaintiffs contend that, even if the action of the Supreme Court was judicial, the federal court had jurisdiction of this controversy because the judgment of the New Jersey courts was limited to a review of the assessment; that, in order to collect the tax to translate the assessment into an enforceable judgment, the state officials must institute a new and independent action -- namely either an action for debt in the name of the state or a statutory proceeding against the persons interested in the estate, and that, since no such action or proceeding had been taken at the time when these suits were filed, there is here no application to "stay proceedings in any court of" New Jersey. That is, the plaintiffs contend that the determination of the amount and validity of the tax is to be treated as an isolated and distinct proceeding, not as a step in the process of determining and collecting the tax imposed.
cause was remanded to the Prerogative Court. By the appeal of the executors, it had acquired jurisdiction not only to determine the tax due, but to take appropriate proceedings for its collection. Its jurisdiction continues until its decree is satisfied.
as a lien by judgment, and execution shall issue thereon according to the rules and practice appertaining to other judgments. [Footnote 15]"
Fourth. The prohibition of § 265 is against a stay of "proceedings in any court of a State." That term is comprehensive. It includes all steps taken or which may be taken in the state court or by its officers from the institution to the close of the final process. [Footnote 16] It applies to appellate, as well as to original, proceedings, and is independent of the doctrine of res judicata. It applies alike to action by the court and by its ministerial officers; applies not only to an execution issued on a judgment, [Footnote 17] but to any proceeding supplemental or ancillary taken with a view to making the suit or judgment effective. [Footnote 18] The prohibition is applicable whether such supplementary or ancillary proceeding is taken in the court which rendered the judgment or in some other. And it governs a privy to the state court proceeding -- like Elinor Dorrance Hill -- as well as the parties of record. Thus, the prohibition applies whatever the nature of the proceeding, unless the case presents facts which bring it within one of the recognized exceptions to § 265. [Footnote 19] It is not suggested that there is a basis here for any such exception.
The conclusion reached by the lower court is consistent with City Bank Farmers' Trust Co. v. Schnader, 291 U.S.
* Together with No.194, Dorrance et al. v. Martin, State Tax .Commissioner, et al. Appeal from the District Court of the United States for the District of New Jersey.
These are the state supervisor of the Inheritance Tax Bureau, the Comptroller of the State, the State Treasurer, and the Attorney General.
See Smith v. Apple, 264 U. S. 274.
2 Comp.Stats. of N.J. of 1910, p. 2208, § 2; 2 Comp.Supp. of 1924, p. 2818, § 163-301.
N.J.Laws of 1931, c. 303, § 18, pp. 763-764; c. 336, p. 823.
N.J.Laws of 1909, § 20, p. 335.
See In re Roebling's Estate, 91 N.J.Eq. 72, 75.
See Central R. Co. of New Jersey v. State Tax Department, 112 N.J.Law, 5, 169 A. 489.
N.J.Laws of 1931, § 21. pp. 764-765.
Id., § 22, p. 765.
N.J.Laws of 1902, c. 158, § 44, pp. 524-525; N.J.Laws of 1931, §21.
See State v. Justices of Middlesex, 1 N.J.Law, 244, 248; Royal Mfg. Co. v. City of Rahway, 75 N.J.Law, 416, 67 A. 940; Dubelbeiss v. Town of West Hoboken, 82 N.J.Law, 683, 686, 82 A. 897; Trenton & Mercer County Traction Corp. v. Mercer County Board of Taxation, 92 N.J.Law, 398, 105 A. 222; Gibbs v. State Board of Taxes and Assessments, 101 N.J.Law, 371, 129 A. 189; Kearny v. State Board of Taxes and Assessments, 103 N.J.Law, 26, 27, 135 A. 61.
See 2 Daniell, Chancery Pleading & Practice (6th Am.Ed. 1894) 1042 et seq.
"If any person shall neglect or refuse to obey any citation, or to perform any sentence or decree of the ordinary or judge of the prerogative court, it shall be lawful for such ordinary and such court to cause such person or persons, by process directed to any sheriff of any county of this state, to be taken and imprisoned until he shall obey the said citation, or perform the said sentence or decree, and every sheriff is hereby directed to cause all such process, to him at any time directed, to be duly executed, and to confine the person against whom such process shall be issued, as in execution, until he shall be delivered by due course of law, and if any sheriff shall neglect his duty therein, he shall be answerable to the party aggrieved in such manner as he would be answerable upon process of the like nature issuing out of the supreme Court."
Compare Hyattsville Building Assn. v. Bouic, 44 App.D.C. 408, 413; United States v. Collins, 25 Fed.Cas. No. 14,834, p. 539; Charles Warren, "Federal and State Court Interference," 43 Harv.L.Rev. 345, 366-378.
Ruggles v. Simonton, 20 Fed.Cas. No. 12, 120, p. 1325; Leathe v. Thomas, 97 F. 136; Ke-Sun Oil Co. v. Hamilton, 61 F.2d 215.
Mutual Reserve Fund Life Assn. v. Phelps, 190 U. S. 147, 190 U. S. 159; American Assn. v. Hurst, 59 F. 1, 5; American Shipbuilding Co. v. Whitney, 190 F. 109.
Compare Wells Fargo & Co. v. Taylor, 254 U. S. 175, 254 U. S. 182-184; Essanay Film Mfg. Co. v. Kane, 258 U. S. 358, 258 U. S. 361; Riehle v. Margolies, 279 U. S. 218, 279 U. S. 223.
See, e.g., Prentis v. Atlantic Coast Line Co., 211 U. S. 210; Keller v. Potomac Electric Power Co., 261 U. S. 428; Ex parte Williams, 277 U. S. 267, 277 U. S. 271-272.

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