Source: https://caselaw.findlaw.com/us-supreme-court/203/543.html
Timestamp: 2019-04-23 17:07:22+00:00

Document:
[203 U.S. 543, 544] Messrs. Charles Rosen and Gustave Lemle for plaintiffs in error.
[203 U.S. 543, 546] Mr. F. C. Zacharie for defendants in error.
Mathias Levy, a resident of New Orleans, died in that city May 26, 1904. He was unmarried and left no ascendants, and was, therefore, without forced heirs. He left a last will and testament of the date of December 23, 1903, in which he named executors and made sundry particular bequests to charitable institutions. He bequeathed the balance of his estate, in equal shares, to his two nieces, Camille Cahen and [203 U.S. 543, 547] Julie Kahn, constituting them thereby his universal legatees and instituted heirs.
The will was duly probated in the civil district court for the parish of Orleans, May 30, 1904. An inventory of his estate was taken June 9, 1904, and a supplementary inventory August 3, 1904. The inventories showed the total appraised value of the estate to be $64,676.05. Of this amount, after deducting the debts and charges of the estate and particular legacies, there was left, as the portion going to the universal legatees, $ 42,927.94.
The final accounting and tableau of distribution was filed August 3, 1904, and approved and homologated by judgment August 16, and the funds ordered to be distributed.
Judgment was rendered in favor of the tax collector, condemning the executors to pay the tax, less the amount of United States bonds, and less the charitable and religious bequests. The judgment was affirmed by the supreme court of the state.
The law imposes a tax of 3 per cent 'on direct inheritances and donations to ascendants or descendants,' and 10 per cent upon donations or inheritances to collaterals or strangers. It is provided that the tax is 'to be collected on all successions not finally closed and administered upon, and all successions hereafter opened.' 1 [203 U.S. 543, 549] It will be observed that when Levy died, May 26, 1904, and when the will was probated, May 30, 1904, there was no inheritance tax in Louisiana. The act in controversy was passed June 28, 1904.
___ 1 Article 940. A succession is acquired by the legal heir, who is called by law to the inheritance, immediately after the death of the deceased person to whom he succeeds.
This rule applies also to testamentary heirs, to instituted heirs, and universal legatees, but not to particular legatees.
Article 941. The right mentioned in the preceding article is acquired by the heir, by the operation of the law alone, before he has taken any step to put himself in possession, or has expressed any will to accept it.
Thus, children, idiots, those who are ignorant of the death of the deceased, are not the less considered as being seised of the succession, though they may be merely seised of right, and not in fact.
Article 942. The heir being considered seised of the succession from the moment of its being opened, the right of possession which the deceased had continues in the person of the heir as if there had been no interruption, and independent of the fact of possession.
Article 944. The heir being considered as having succeeded to the deceased from the instant of his death, the first effect of this right is that the heir transmits the succession to his own heirs, with the right of accepting or renouncing, although he himself have not accepted it, even in case he was ignorant that the succession was opened in his favor.
Article 945. The second effect of this right is to authorize the heir to institute all the actions, even possessory ones, which the deceased had a right to institute, and to prosecute those already commenced. For the heir, in everything, represents the deceased, and is of full right in his place, as well for his rights as his obligations.
Article 1609. When, at the decease of the testator, there are no heirs to whom a proportion of his property is reserved by law, the universal legatee, by the death of the testator, is seised of right of the effects of the succession without being bound to demand the delivery thereof. [203 U.S. 543, 550] as indubitable that, under the law of Louisiana, a succession is acquired by the legal heir immediately after the death of the deceased, and, by the express terms of the Code, this rule applies to testamentary heirs, to instituted heirs, and universal legatees. In other words, that the acquisition of the succession by plaintiffs in error was at the very moment of Levy's death, and, therefore, necessarily before the act imposing inheritance taxes was passed. To sustain their view plaintiffs in error cite a number of cases decided prior to the decision of the case at bar, and the case of Tulane University v. Board of Assessors, 115 La. 1026, 40 So. 445, decided since the decision in the case at bar. Having established, as it is contended, that by operation of law the property is transmitted immediately from the testator to the heirs, it is also contended that from the very definition of an inheritance tax none could be imposed on plaintiffs in error as legatees of Levy.
For definitions of an inheritance tax plaintiffs in error adduce United States v. Perkins, 163 U.S. 625 , 41 L. ed. 287, 16 Sup. Ct. Rep. 1073; Magoun v. Illinois Trust & Sav. Bank, 170 U.S. 283 , 42 L. ed. 1037, 18 Sup. Ct. Rep. 594; Knowlton v. Moore, 178 U.S. 41 , 44 L. ed. 969, 20 Sup. Ct. Rep. 747. The tax was defined in the Perkins Case to be 'not a tax upon the property itself, but upon its transmission by will or descent;' and in the Magoun Case, 'not one on property, but one on the succession.' In Knowlton v. Moore it was said that such taxes 'rest in their essence upon the principle that death is the generating source from which the particular taxing power takes its being, and that it is the power to transmit, or the transmission from the dead to the living, on which such taxes are more immediately rested.' But these definitions were intended only to distinguish the tax from one on property, and it was not intended to be decided that the tax must attach at the instant of the death of a testator or [203 U.S. 543, 551] intestate. In other words, we defined the nature of the tax; we did not prescribe the time of its imposition. To have done the latter would have been to prescribe a rule of succession of estates, and usurp a power we did not and do not passess. There is nothing, therefore, in those cases which restrains the power of the state as to the time of the imposition of the tax. It may select the moment of death, or it may exercise its power during any of the time it holds the property from the legatee. 'It is not,' we said in the Perkins Case, 'until it has yielded its contribution to the state that it becomes the property of the legatee.' See also Carpenter v. Pennsylvania, 17 How. 456, 15 L. ed. 127.
We must turn back, therefore, to the law of Louisiana for the solution of the questions presented in the case at bar. But we are not required to reconcile the Louisiana decisions. We accept that in the case at bar as a correct interpretation of the Code of the state. Nor may we regard Tulane University v. Board of Assessors as irreconcilable with it. That case was brought to enjoin the collection of state and city taxes which had been assessed against the succession of A. C. Hutchinson. The plaintiff university was the universal legatee of Hutchinson, and its property was exempt from taxation under the Constitution of the state. It is true the court said that the Code of the state 'leaves no room whatever for doubt or surmises as to the fact of the property of a deceased person being transmitted directly and immediately to the legal heir, or, in the absence of forced heirs, to the universal legatee, without any intermediate stage, when it would be vested in the successive representative or in the legal abstract called 'succession."
Successions which have been closed, it is said, are exempt from the tax, and a discrimination is made between heirs whose rights have become fixed and vested on the same day. Counsel say: 'The closing of the succession cannot affect the question as to when the right of the heirs vested; and cannot be cause for differentiation among the heirs; and such a classification is purely arbitrary. Besides, such a classification rests on the theory that the tax is one on property, when in fact it is one on the right of inheritance.' But, as we understand, the supreme court made the validity of the tax depend upon the very fact which counsel attack as an improper basis of classification. The court decided the property bequeathed was property the state could tax, 'until it had passed out of the succession of the testator.' It was certainly not improper classification to make the tax depend upon a fact without which it would have been invalid. In [203 U.S. 543, 553] other words, those who are subject to be taxed cannot complain that they are denied the equal protection of the laws because those who cannot legally be taxed are not taxed.
[ Footnote 1 ] Section 1. Be it enacted by the general assembly of the state of Louisiana, That there is now, and shall hereafter be, levied, solely for the support of the public schools, a tax upon all inheritances, legacies, and donations; provided, no direct inheritance or donation to an ascendant or descendant, below $10,000 in amount or value, shall be so taxed; a special inheritance tax of 3 per cent on direct inheritances or donations to ascendants or descendants, and 10 per cent for collateral inheritances and donations to collaterals or strangers; provided, bequests to educational, religious, or charitable institutions shall be exempt from this tax; and provided, further, that this tax shall not be enforced when the property donated or inherited shall have borne its just proportion of taxes prior to the time of such donation or inheritance; this tax to be collected on all successions not finally closed and administered upon, and all successions hereafter opened.

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