Source: https://www.legalcrystal.com/case/97285/riggs-vs-del-drago
Timestamp: 2018-03-23 20:42:39
Document Index: 68886712

Matched Legal Cases: ['§ 800', '§ 800', '§ 124', '§ 800', '§ 124', '§ 124', '§ 124', '§ 826', '§ 207', '§ 208', '§ 826', '§ 812', '§ 826', '§ 822', '§ 826', '§ 826', '§ 826', '§ 811', '§ 826', '§ 811', '§ 124']

Riggs Vs Del Drago - Citation 97285 - Court Judgment | LegalCrystal
Riggs Vs. Del Drago - Court Judgment
LegalCrystal Citation legalcrystal.com/97285
Case Number 317 U.S. 95
Respondent Del Drago
.....of new york county, new york syllabus 1. section 124 of the new york decedent estate law, requiring that, unless otherwise directed by the decedent's will, the burden of any federal estate tax paid by the executor or administrator be apportioned among the beneficiaries of the estate, is not in conflict with the federal estate tax law (internal revenue code, § 800 et seq. ), and does not contravene the supremacy clause of the federal constitution. pp. 317 u. s. 97 , 317 u. s. 102 . the intent of congress was that the federal estate tax should be paid out of the estate as a whole, and that the distribution of the remaining estate and the ultimate impact of the federal tax should be determined under the state law. the provisions of the revenue.....
Riggs v. Del Drago - 317 U.S. 95 (1942)
U.S. Supreme Court Riggs v. Del Drago, 317 U.S. 95 (1942)
1. Section 124 of the New York Decedent Estate Law, requiring that, unless otherwise directed by the decedent's will, the burden of any federal estate tax paid by the executor or administrator be apportioned among the beneficiaries of the estate, is not in conflict with the federal estate tax law (Internal Revenue Code, § 800 et seq. ), and does not contravene the supremacy clause of the Federal Constitution. Pp. 317 U. S. 97 , 317 U. S. 102 .
2. Nor does the fact that the ultimate incidence of the federal estate tax is thus governed by state law violate the constitutional requirement of geographical uniformity in federal taxation. P. 317 U. S. 102 .
The question for decision is whether § 124 of the New York Decedent Estate Law, [ Footnote 1 ] which provides in effect that, except as otherwise directed by the decedent's will, the burden of any federal death taxes paid by the executor or administrator shall be spread proportionately among the distributees or beneficiaries of the estate, is unconstitutional because in conflict with the federal estate tax law, Internal Revenue Code, § 800 et seq.
The executors paid approximately $230,000 on account of the federal estate tax, and then asked the Surrogate, in a petition for the settlement of their account, to determine whether that payment should be equitably apportioned among all the persons beneficially interested in the estate pursuant to § 124 of the Decedent Estate Law. Giovanni and Marcel del Drago answered, raising objections to the constitutionality of § 124. Petitioner, who was appointed special guardian to represent the interests of the infant remaindermen under the residuary trust, urged that the tax be apportioned. The Surrogate overruled the constitutional objections and directed apportionment. [ Footnote 2 ] The New York Court of Appeals by a divided court reversed, holding § 124 repugnant to the federal estate tax law -- particularly to § 826(b) of the Internal Revenue Code -- and in violation of the supremacy (Art. VI, cl. 2) and the uniformity (Art. I, Sec. 8, cl. 1) clauses of the Constitution. [ Footnote 3 ] The importance of the question moved us to grant certiorari.
In the Act of 1916, Congress turned from the previous century's inheritance tax upon the receipt of property by survivors ( see Knowlton v. Moore, 178 U. S. 41 ; Scholey v. Rew, 23 Wall. 331) to an estate tax upon the transmission of a statutory "net estate" by a decedent. That act directed payment by the executor in the first instance, § 207, but provided also for payment in the event that he failed to pay, § 208. It did not undertake in any manner to specify who was to bear the burden of the tax. Its legislative history indicates clearly that Congress did not contemplate that the Government would be interested in the distribution of the estate after the tax was paid, and that Congress intended that state law should determine the ultimate thrust of the tax. [ Footnote 4 ] That Congress, from
1916 onward, has understood local law as governing the distribution of the estate after payment of the tax (with the limited exceptions created by § 826(c) and (d) of the Internal Revenue Code, to be discussed presently) is confirmed by § 812(d) of the Code, dealing with charitable deductions, which recognizes that estate taxes may be payable in whole or in part out of certain bequests, etc. "by the law of the jurisdiction under which the estate is administered." [ Footnote 5 ] The administrative interpretation has been in accord, [ Footnote 6 ] and that has been the understanding of the federal courts [ Footnote 7 ] and of some state courts. [ Footnote 8 ]
In reaching a contrary result, the court below relied primarily upon § 826(b). [ Footnote 9 ] But that section does not direct how the estate is to be distributed, nor does it determine who shall bear the ultimate burden of the tax. As pointed out before, while the federal statute normally contemplates payment of the tax before the estate is distributed, § 822(b) of the Code, provision is made for collection of the tax if distribution should precede payment. § 826(a). If any distributee is thus called upon to pay the tax, § 826(b) provides that such person
Respondents also rely on § 826(c), [ Footnote 10 ] authorizing the executor to collect the proportionate share of the tax from the beneficiary of life insurance includable in the gross estate by reason of § 811(g), and § 826(d), [ Footnote 11 ] authorizing similar action against a person receiving property subject to a power which is taxable under § 811(f), as forbidding further apportionment by force of state law against other
distributees. [ Footnote 12 ] But these sections deal with property which does not pass through the executor's hands, and the Congressional direction with regard to such property is wholly compatible with the intent to leave the determination of the burden of the estate tax to state law as to properties actually handled as part of the estate by the executor.
Since § 124 of the New York Decedent Estate Law is not in conflict with the federal estate tax statute, it does not contravene the supremacy clause of the Constitution. Nor does the fact that the ultimate incidence of the federal estate tax is governed by state law violate the requirement of geographical uniformity. Cf. Phillips v. Commissioner, 283 U. S. 589 , 283 U. S. 602 .
Edwards v. Slocum, 287 F. 651, 653, aff'd, 264 U. S. 264 U.S. 61, 264 U. S. 63 ; YMCA v. Davis, 264 U. S. 47 , 264 U. S. 51 ; New York Trust Co. v. Eisner, 256 U. S. 345 , 256 U. S. 349 ; Hepburn v. Winthrop, 65 App.D.C. 309, 83 F.2d 566, 572.