Source: https://supreme.justia.com/cases/federal/us/256/345/case.html
Timestamp: 2016-08-28 10:31:51
Document Index: 476966744

Matched Legal Cases: ['§ 201', '§ 203', '§ 204', '§ 205', '§ 207', '§ 209', '§ 208']

New York Trust Co. v. Eisner :: 256 U.S. 345 (1921) :: Justia U.S. Supreme Court Center Log In
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New York Trust Co. v. Eisner 256 U.S. 345 (1921)
U.S. Supreme CourtNew York Trust Co. v. Eisner, 256 U.S. 345 (1921)New York Trust Company v. EisnerNo. 286Argued April 25, 26, 1921Decided May 16, 1921256 U.S. 345ERROR TO THE DISTRICT COURT OF THE UNITED STATES
1. The Act of September 8, 1916, c. 463, Title II, § 201 et seq., 39 Stat. 777, imposes a tax on the transfer of the net estate of every decedent, graduated according to the value as ascertained by deducting, in the case of a resident, from the gross estate, funeral, administration and other expenses and charges, and a specified exemption; the tax is due in one year from the decedent's death, is payable primarily by the personal representative, and is made a lien upon the gross estate except such part as is paid out for allowed charges, etc. Held, an indirect tax, not requiring apportionment, and not an unconstitutional interference with the rights of the states to regulate descent and distribution. P. 256 U. S. 348. Knowlton v. Moore, 178 U. S. 41.
2. That the tax may occasion inequalities in amounts received by beneficiaries does not affect its validity. P. 256 U. S. 349.
3. "Charges against the estate," deductible under § 203 of the act in computing net value, affect the estate as a whole, and therefore do not include state inheritance and succession taxes on the shares of individual beneficiaries. P. 256 U. S. 350.
The case is stated in the opinion. Page 256 U. S. 346
"a tax . . . equal to the following percentages of the value of the net estate, to be Page 256 U. S. 347 determined as provided in section two hundred and three, is hereby imposed upon the transfer of the net estate of every decedent dying after the passage of this Act,"
The tax is to be due in one year after the decedent's death. § 204. Within thirty days after qualifying, the executor is to give written notice to the collector and later to make return of the gross estate, deductions allowed, net estate, and the tax payable thereon. § 205. The executor is to pay the tax. § 207. The tax is a lien for ten years on the gross estate except such part as is paid out for allowed charges, § 209, and if not paid within sixty days after it is due, is to be collected by a suit to subject the decedent's property to be sold, § 208. In case of collection from some person other than the executor, the same section provides for contribution from or marshalling of persons subject to equal or prior liability "it being the purpose and intent of this title that, so far as is practicable and unless otherwise directed by the will of the decedent, the tax Page 256 U. S. 348 shall be paid out of the estate before its distribution." These provisions are assailed by the plaintiffs in error as an unconstitutional interference with the rights of the states to regulate descent and distribution, as unequal and as a direct tax not apportioned as the Constitution requires.
The statement of the constitutional objections urged imports on its face a distinction that, if correct, evidently hitherto has escaped this Court. See United States v. Field, 255 U. S. 257. It is admitted, as, since Knowlton v. Moore, 178 U. S. 41, it has to be, that the United States has power to tax legacies, but it is said that this tax is cast upon a transfer while it is being effectuated by the state itself, and therefore is an intrusion upon its processes, whereas a legacy tax is not imposed until the process is complete. An analogy is sought in the difference between the attempt of a state to tax commerce among the states and its right after the goods have become mingled with the general stock in the state. A consideration of the parallel is enough to detect the fallacy. A tax that was directed solely against goods imported into the state and that was determined by the fact of importation would be no better after the goods were at rest in the state than before. It would be as much as interference with commerce in one case as in the other. Darnell & Son Co. v. Memphis, 208 U. S. 113; Welton v. Missouri, 91 U. S. 275. Conversely if a tax on the property distributed by the laws of a state, determined by the fact that distribution has been accomplished, is valid, a tax determined by the fact that distribution is about to begin is no greater interference, and is equally good.
Knowlton v. Moore, 178 U. S. 41, dealt, it is true, with a legacy tax. But the tax was met with the same objection -- that it usurped or interfered with the exercise of state powers, and the answer to the objection was based upon general considerations and treated the "power to transmit Page 256 U. S. 349 or the transmission or receipt of property by death" as all standing on the same footing. 178 U. S. 178 U.S. 57, 178 U. S. 59. After the elaborate discussion that the subject received in that case, we think it unnecessary to dwell upon matters that, in principle, were disposed of there. The same may be said of the argument that the tax is direct, and therefore is void for want of apportionment. It is argued that, when the tax is on the privilege of receiving, the tax is indirect, because it may be avoided, whereas here the tax is inevitable, and therefore direct. But that matter also is disposed of by Knowlton v. Moore, not by an attempt to make some scientific distinction, which would be at least difficult, but on an interpretation of language by its traditional use on the practical and historical ground that this kind of tax always has been regarded as the antithesis of a direct tax; "has ever been treated as a duty or excise, because of the particular occasion which gives rise to its levy." 178 U.S. 178 U. S. 81-83. Upon this point a page of history is worth a volume of logic.
There remains only the construction of the Act. The argument against its constitutionality is based upon a premise that is unfavorable to the contention of the plaintiffs in error upon this point. For if the tax attaches to the estate before distribution -- if it is a tax on the right Page 256 U. S. 350 to transmit, or on the transmission at its beginning, obviously it attaches to the whole estate except so far as the statute sets a limit. "Charges against the estate," as pointed out by the court below, are only charges that affect the estate as a whole, and therefore do not include taxes on the right of individual beneficiaries. This reasoning excludes not only the New York succession tax, but those paid to other states, which can stand no better than that paid in New York. What amount New York may take as the basis of taxation and questions of priority between the United States and the state are not open in this case.