Court Opinion

ID: 6575787
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:34:09.915596+00
Date Added: 2024-06-11T15:57:01.405002
License: Public Domain

The opinion of the court was delivered, at the circuit session in September, 1856, by
Redeield, Ch. J.
I. The first question made in this case is, whether stocks of one of the American states, held by a trustee, under a will, the income of which, only, is to be paid to a married woman, or other person, but the principal of which is, after the the decease of such person, to go into the mass of the estate, and be disposed of, under the will, is to be set in the list, to the person receiving the income, or to the executor of the estate.
The 5th paragraph in § 15 chapter 80 of the Compiled Statutes, seems to us to require the assessment to be made to the person receiving the income. It speaks of the money as being held in trust, but it does not intimate that it must be held in trust, for the person receiving the income, in order to have the assessment made to him. But if held in trust, so that the income is to go to any one, the assessment shall be made to such person, in the town of which such person is an inhabitant. This seems to us purposely so expressed, that it might embrace cases like the present, where the person receiving the income, was never to receive the principal, which is not an uncommon case, and might very naturally have been anticipated by the framers of the statute.
This view might be fortified by the analogies of taxation, generally, falling, as it does, or is intended to, chiefly upon income. And if one person were entitled to the income, and another to the ultimate inheritance, or bequest of the principal, without its returning again into the mass of the estate, no one could question the probable purpose of the legislature, to make the assessment upon the present usufruct.
H. The other question made in the case is one of great importance, and possibly, upon mere comity, not altogether free from difficulty, if the tax upon the owner of state stocks be fairly capable of being viewed as any abridgement of the absolute rights of sovereignty of the state issuing the stock.
But, it seems to us, no such view is fairly maintainable. The sovereignty of a state certainly has no extraterritorial force, or existence. One state has no right, either as an independent foreign sovereignty, or as a member of the great republic of affiliated states,‘tinder the constitution, to demand the issue and sale¿of her public stocks in any other state. The United States government may be *191said to possess this right throughout the states and territories, and a specific tax, imposed by the states, upon any of the instruments or functions of the general government, may, undoubtedly, be fairly regarded as an unwarrantable interference with the paramount sovereignty. For it is impossible to deny that the general national government, within the sphere of its just operation, is supreme and paramount to all other sovereignty. We cannot, therefore, question the soundness, of the decision of the United States supreme court, in the case of McCullough v. The State of Maryland, 4 Wheaton 316. [4 Cond. U. S. Sup. Court 466.] The United States bank was upheld by the national tribunals as a necessary fiscal agent, to aid the general government in its financial operations. And although these views no longer obtain, there could be no doubt, that while the national government saw fit to employ such an instrument, in the administration of its functions, any specific tax upon its issues was, so far forth, an abridgment of its powers, and an interference with its functions, thus bringing the two sovereignties in direct conflict, and to that extent in collision, which was certainly at variance with the whole theory of the national government. For if the states could hinder and impede the functions, and retard the operations of the instruments of the national government, they might, by parity of reason, wholly destroy them. And this, as was well said by Ch. J. Marshall, in his very elaborate and satisfactory opinion, in this case, might be effected at any time, by simply increasing the impost, or tax, upon the issues of the bank. But a tax upon the owners of the stock of the bank, in common with ihe owners of other stocks, or money, could have no such effect. Such a tax would operate equally upon all property in the state, or upon the inhabitants of the state, in proportion to their income, whether from property within the state, or not. For it has often been decided that a state máy impose a tax upon its inhabitants for income derivable from stocks, or other property, without the state. And in the conclusion of this opinion the court takes occasion to say, the decision “ does not extend to a tax paid by the real property of the bank, in common with the other real property within the state, nor to a tax imposed on the interest which the citizens of Maryland may *192hold in this institution, in common with other property of the same description, throughout the state.”
This decision does not intimate any ground upon which a state could be deprived of the right to tax its inhabitants for income resulting from United States bank stocks, or even from their own stocks. But the case of Weston v. The City of Charleston, 2 Pet. 449, seems to go further, and to prohibit a tax upon income derivable from United States stocks. But this is placed upon the same ground as the specific tax upon the issues of the United States Bank. But it has no application to stocks issued by the states.
And the rule, as applied to the owners of United States stocks, is certainly not without serious ground for question, as the dissenting opinions of Messrs. J. J. Johnson and Thompson show. And when, if ever, the national stocks shall be swelled to the enormous extent of many European countries, so as to absorb the larger proportion of the national wealth, in personality, it would certainly demand serious consideration whether any such rule is maintainable, upon just and fair principles of reason and justice, but it seems to be settled as authority, so far as the U. S. supreme court is concerned. But it has always seemed to me that the opinions of J. J. Johnson and Thompson, and Ch. J. Marshall, in Mo Gullough v. Maryland, all which admit that United States stocks, considered as a source of income, may form the basis of personal taxation, contain the soundest view of the subject, and that it will finally prevail in that court.
Judgment affirmed.