Court Opinion

ID: 6737913
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:19:59.258665+00
Date Added: 2024-06-11T16:01:51.810903
License: Public Domain

Bruce, Ch. T.
This is an appeal from an order and judgment of the-district court of Cass county reversing an order of the county court fixing the amount of the inheritance tax to be paid on the legacy of the-respondent Elina A. Skarderud.
Elina A. Skarderud is a subject and resident of Norway. She has-*483a sister and brother, one residing in Fargo, and the other in California, both of whom are citizens of the United States. These three are collateral heirs, and by will are given the entire property, real and personal, of Martin A. Hagen, deceased, who in his lifetime was a citizen of the United States, domiciled in Fargo, Cass county, North Dakota. This appeal involves the constitutionality of the Inheritance Tax Law as applied to the respondent Elina A. Skarderud. As to the other heirs, it is conceded the tax is lawful, and is payable on a basis of 1-£ per cent up to $25,000 and 2% per cent on the excess. The tax computed against the share of Elina A. Skarderud was at the rate of 25 per cent, which is the amount required by the statute to be taxed in the case of aliens who are not residents of the United States.
. The part of the act (Comp. Laws 1913, § 8977) which is in dispute reads as follows: “Upon the transfer of property in any manner hereinbefore described to or for the use of collateral relations or strangers in blood who are aliens not residing in the United States or to or for the use of any corporation which is not chartered by the authority of the government of the United States or of any state, a tax of 25 per centum shall be levied and collected.”
It is contended that this clause violates § 11 of art. 1 of the Constitution of the state of North Dakota, which provides that “laws of a general nature shall have a uniform operation.” Also § 20 of art. 1, which provides that “no special privileges or immunities shall ever be granted which may not be altered, revoked or repealed by the legislative assembly; nor shall any citizen or class of citizens be granted privileges or immunities which upon the same terms shall not be granted to all citizens.” It is also contended that the act violates the provision of art. 6 of the Treaty of Amity and Commerce which was entered into, between the United States and Norway and Sweden in 1783, and' revised by art. 17 of the Treaty of Commerce and Navigation of 1827„ and later still, and after the separation of Norway and Sweden, reaffirmed between the several nations.
It is clear to us that § 20 of art. 1 of the Constitution of North Dakota has no connection with the case at bar. The respondent Elina A. Skarderud is concededly not a citizen of North Dakota, nor of the United States. The constitutional provision, therefore, has no applicability to her. Magoun v. Illinois Trust & Sav. Bank, 170 U. S. 283, *48442 L. ed. 1037, 18 Sup. Ct. Rep. 594; Mager v. Grima, 8 How. 490, 12 L. ed. 1168. Even if the tax be looked upon as a limitation on the right of the decedent to devise and bequeath, the limitation applies to 'all citizens and all residents of North Dakota, and therefore does not discriminate as to any privilege or any immunity.
Nor do we believe that the statute in any way violates § 11 of art. 1, which provides that “laws of a general nature shall have a uniform operation.”
It is certainly uniform as to all decedents in North Dakota. It is certainly uniform as to all nonresident aliens. Magoun v. Illinois Trust & Sav. Bank, supra.
The only criticism then that can be made against it is that it discriminates against these nonresident aliens as compared with citizens of the United States and with resident aliens.
It is, of course, well established that a reasonable classification does not subject a law to the taint of lack of uniformity, and that in passing upon the question the test is “a just and natural reason of necessity or propriety for the difference made by the law in the liabilities and rights” of the members of the several classes. Chicago, M. & St. P. R. Co. v. Westby, 47 L.R.A.(N.S.) 97, 102 C. C. A. 65, 178 Fed. 619; Re McKennan, 27 S. D. 136, 33 L.R.A.(N.S.) 620, 130 N. W. 33, Ann. Cas. 1913D, 745; State ex rel. Foot v. Bazille, 97 Minn. 11, 6 L.R.A.(N.S.) 732, 106 N. W. 93, 7 Ann. Cas. 1056; Frederickson v. Louisiana, 23 How. 445, 16 L. ed. 577.
We believe that there is “a just and natural reason of necessity or propriety for the classification which is made.”
We must start with the premise that the right to inherit or to take by will and the right to devise and bequeath are not natural and inalienable rights, nor are they guaranteed by the state or Federal Constitutions, but are entirely within the control of the sovereign state. United States v. Perkins, 163 U. S. 625, 41 L. ed. 287, 16 Sup. Ct. Rep. 1073; Magoun v. Illinois Trust & Sav. Bank, supra.
We must further recognize the historical and legal fact that even when the right to devise and to bequeath, and to take by will, and to inherit has been recognized by statute, as it has been, generally, throughout the Hnited States, the alien has never, in the absence of permissive legislation, been allowed, as against the sovereign state, to take by *485descent or even by will. 2 C. J. 1054, 1057; Connolly v. Reed, 22 Idaho, 29, 125 Pac. 213. We must also adopt the premise that statutes which change the common law and which allow aliens to take by will or to inherit are not to be looked upon in the light of a recognition or extension of any previously existing right belonging to such aliens, but rather as a fresh grant or a right or a statute of grace which the state chooses to confer. 2 C. J. 1062; Connolly v. Reed, supra.
We may also add that we seriously question the proposition that a nonresident alien can invoke the provisions of the state and Federal Constitutions at all. He owes no allegiance to our flag or our government. He may, as far as we know, be plotting our destruction. Why should we be presumed to give when we receive nothing. The Constitution, no doubt, follows the flag. But the American flag does not wave over the continent of Europe. See Wunderle v. Wunderle, 144 Ill. 40, 19 L.R.A. 84, 33 N. E. 195. We merely suggest the point, however, and make no holding upon it.
Be this as it may, however, we believe that there is a valid reason for the discrimination, and even though resident and nonresident aliens are not treated alike.
It must indeed be apparent to all that a sovereign state must have' the right to impose a higher inheritance tax on nonresident aliens than upon its own residents and citizens. Residents and citizens together tend to make up the united strength of the state and of the nation, for it is of men and women that states are made. Mager v. Grima, 8 How. 493, 12 L. ed. 1170.
It is also clear that although a state, without the consent of Congress, may only levy such taxes on exports as are necessary for executing its Inspection Laws (Fed. Const. § 10, art. 1), the right of the several states to control the disposition of their own property and the laws of descent and inheritance have not been taken away from them. Magoun v. Illinois Trust & Sav. Bank and Wunderle v. Wunderle, supra.
It is now generally conceded that the right to inherit or take by will is not a natural and inalienable right, nor is the right to bequeath and devise, and if this be true of the citizens of a state, much more must it be true of nonresident aliens.
There is nothing in the state or in the Federal Constitutions which prevents a state, if it will, from returning to the medieval theory and *486practice and of providing that upon the death of the owner all of his property shall escheat to it. If, as has been held by the Supreme Court of the United States in the case of McCready v. Virginia, 94 U. S. 391, 24 L. ed. 248, a state may reserve the use of its oyster beds to its own citizens, and if a state can take away the right or power to dispose by will or to inherit, it may place upon the right, if granted, whatever limitations it may please. 6 R. C. L. 428; Mager v. Grima, 8 How. 490, 12 L. ed. 1168; Magoun v. Illinois Trust & Sav. Bank, 170 U. S. 283, 42 L. ed. 1037, 18 Sup. Ct. Rep. 594; Connolly v. Reed, 22 Idaho, 29, 125 Pac. 213.
There is a wide difference between a tax on the right to export or to carry out of the state after the property has passed to the heir or legatee and has become his, and a tax on the property before it passes to such person, or on the right of the decedent to will and bequeath and the right of the legatee to accept. Re Anderson, 166 Iowa, 617, 52 L.R.A.(N.S.) 686, 147 N. W. 1098.
In such a case the state is really dealing with its own property or with that which, if it chose, could be its own property. It is simply saying, this property is of right and ancient usage ours, but we will give citizens of the United States, whether residing here or abroad, and alien citizens, provided they reside in the United States, 98J per cent of that which the decedent desired that they should have, but to aliens who do not reside in the United States we will only give 75 per cent, and the remainder we will keep for ourselves. Mager v. Grima and Connolly v. Reed, supra.
If reason were necessary to be given for this discrimination between resident and nonresident aliens, it would be easy to be found, and even though the aliens do not reside within the state of North Dakota, but within some other state of the American Union. A resident of another state of the Union, even though an alien, learns of our institutions, and becomes imbued with our spirit. Especially if he has children who attend our public schools, he cannot help but become attached to us. If children are born to him within our borders, they, by that very fact, become citizens. In case of war he is usually an alien friend rather than an alien enemy.
We are a nation, indeed, though composed of many states. Our state officers first swear to support the Constitution of the United States and *487-then the Constitution of their own state. Every person born or naturalized in the United States and subject to the jurisdiction thereof is a ■citizen first of the United States and then of the state in which he resides. See 14th Amendment to the Federal Constitution. No state liveth unto itself or by itself.
Surely it is for the interest of the state of North Dakota that the property of the United States shall as far as possible be kept within the confines of the country, even though not within our own borders. It is created under the protection of the same flag and the same national Constitution.
All private property within the United States is subject to Federal taxation, and the wealth and prosperity of the United States as a whole are of vital importance to the citizens and residents of every state. The expenses of the national government must be met, and are •everyday becoming greater, and greater. Not only this, but the Federal taxing power is everyday incroaching upon the resources of the several states. The more, for instance, that is taken from the citizens of North Dakota by the Federal income tax, the less money and property have our citizens and residents to meet our own local and state exactions and to pay our state income tax, and our state taxes generally. We are vitally interested in the' wealth of other states because they pay a proportionate share of the general Federal taxes which we all must pay. The nation is “the United States.” The growth of every other state in opportunity and prosperity, and in all that opportunity and prosperity, when rightfully used, bring, is of moment to us. Their strength, both moral and material, helps to make up the sum of national greatness. Their people are our people; their flag is our flag; and their God is our God.
Nor do we believe that the act is in violation of article 6 of the Treaty of Amity and Commerce of 1783, between the United States and Norway and Sweden, as revised by article 17 of the treaty of Commerce and Navigation of 1827, and which treaty reads as follows: “The subjects of the contracting parties in the respective states, may freely dispose of their goods and effects either by testament, donation or otherwise, in favor of such persons as they think proper; and their heirs in whatever place they shall reside, shall receive the succession ab intestate, either in person or by their attorney, without having occa*488sion to take out letters of naturalization. • These inheritances, as well' as the capitals and effects, which the subjects of the two parties, in changing their dwelling, shall be desirous of removing from the place-of their abode, shall be exempted from all duty, called 'droit de detraction’ on the part of the government of the two states respectively. But it is at the same time agreed, that nothing contained in this, article shall in any manner derogate from the ordinances published in Sweden against emigrations, or which may hereafter be published, which, shall remain in full force and vigor*. The United States on their part, or any of them, shall be at liberty to make, respecting this matter,, such laws as they think proper.” [8 Stat. at L. 64.]
We fail, indeed, to see how this treaty is in any way applicable. As-we have before pointed out, the deceased was not a citizen of Norway, but of North Dakota, and of the United States. The treaty clearly relates-only to the rights and privileges of the subjects of the United States in Norway and the subjects of Norway in the United States, and those who take or inherit from them. So, too, it is perfectly clear that the-.subject of taxation was not attempted to be covered by the treaty, and much less the inheritance tax. The term “droit de detraction” has-always had a well-defined meaning. It is a tax levied upon the removal from the one state or country to another of property acquired by succession or testamentary disposition, and it does not cover taxes upon the-succession to or transfer of property. Re Peterson, 168 Iowa, 511, L.R.A.1916A, 469, 151 N. W. 66; Frederickson v. Louisiana, 23 How. 447, 16 L. ed. 579; Re Stroebel, 5 App. Div. 621, 39 N. Y. Supp. 169.
The treaty in question was first concluded in the year 1783 (8 Stat. at L. 60), and afterwards revised in the year 1816 (8 Stat. at L. 232) and again in 1827 (8 Stat. at L. 346). In the year 1783 there was-no such thing as an inheritance tax either in the United States as a whole or in any of the several states. The first Federal tax was enacted in 1864. The first state tax, that of-Pennsylvania, was not enacted until' 1826. The next in point of time was that of Virginia, which was enacted in 1824, then that of Maryland, which was enacted in 1864, and then that of Delaware, which was enacted in 1869. The same rule-.applies in construing treaties as is applied in construing contracts, and that is that things not in existence will hardly be deemed to have been contemplated. Re Anderson, 166 Iowa, 617, 52 L.R.A.(N.S.) 686, *489147 N. W. 1098; Geofroy v. Riggs, 133 U. S. 258, 33 L. ed. 642, 10 Sup. Ct. Rep. 298; Ee Peterson, supra.
It is clear, therefore, from reading the treaty that all that was contemplated thereby was that the citizens of Norway, residing in North' Dakota or in any of the United States, should be allowed to freely dispose by will, gift, or otherwise of their property, and that their heirs-might receive such property without taking out letters of naturalization. The treaty does not apply to citizens of the United States as far as the-right of disposition is concerned, nor to the beneficiaries by will or otherwise of the estates of citizens of the United States. Fredericksom v. Louisiana, 23 How. 445, 16 L. ed. 577. The "droit de detraction also, which is spoken of, merely relates to taxes upon the right of withdrawal from the country after the property has passed to the beneficiary. It has no relation whatever to a tax which is levied on the right of disposition or upon the right to receive property by will or descent, and which attaches and is levied before the property passes into the possession of the beneficiary. Ee Peterson, supra.
We realize that the case of Re Stixrud, 58 Wash. 339, 33 L.R.A. (N.S.) 632, 109 Pac. 343, Ann. Cas. 1912A, 850, holds to a doctrine-contrary to that here announced and that announced in the case of EePeterson, supra. The plain language of the treaty compels us, however, to dissent from this opinion, and to follow the holding of the-supreme court of Iowa in the case of Ee Peterson, supra, which appears-to us to be much more sound and reasonable.
The case of Geofroy v. Riggs, supra, cited by counsel for respondents,, was a controversy purely between two citizens of France, and involved' the inheritance of land in the District of Columbia. The District of Columbia does not seem to have asserted any right; no question of taxation was involved, and at any rate, if any sovereignty was involved, it was the sovereignty of the nation. The treaty, too, provided that “the citizens and inhabitants of the United States shall be at liberty to dispose, etc.,” and was not like the treaty with Norway, confined! merely to the rights of the citizens of the respective nations.
The case of Hauenstein v. Lynham, 100 U. S. 483, 25 L. ed. 628,. involved the estate of a citizen of Switzerland who a resident of Virginia, and the claimant was' also a citizen of Switzerland. The provisions of the treaty, therefore, were clearly applicable to the parties,. *490•and though a liberal doctrine of construction was applied as to the •express terms of the instrument, there was no attempt to add to the treaty other terms which were not included in it.
The opinion in the ease of Re Stixrud, indeed, is much influenced by .a recognition of the supposed rule of liberal construction which is presumed to apply to the case of treaties with foreign powers.
Though this rule may apply as between the United States and the ■citizens of the foreign nations, and as between the citizens of the United States and the foreign nations, we know of no such rule having boon applied when the treaty violates to a greater or lesser extent the rights .and prerogatives of the sovereign states, and much less to justify a construction which is not a construction, but an act of judicial legislation. It has, with the sole exception of the case of Re Stixrud (and then only in a state court, and not in the Supreme Court of the United States), never been applied in a case where a sovereign'state was represented and sought to assert the prerogatives of its taxing power. We .are firmly convinced that the so-called liberality of construction and what appears to us to be judicial legislation should never be tolerated as against such rights.
The whole structure of the American government is builded upon .a foundation of state home rule, and though there may be in some cases where the state was really not vitally interested and its taxing power not involved, a more or less tacit acquiescence in the doctrine, we do not believe that any student of history will for a moment contend that the treaty-making powerwas ever intended to have been conferred upon the national government to such an extent as to interfere with the legitimate functions of the sovereign states.
It is to be remembered, indeed, that the treaty-making power is an ■extraordinary and undemocratic power. Unlike any other law, all that is necessary to the enactment of a treaty is the consent of the President and two thirds of the Senate. If, under this power, the right to the inheritance of land and property can be controlled at all (and it would seem from the case of Hauenstein v. Lynham, supra, that it may), the President and two thirds of the Senate can accomplish that which the people represented in both branches of the national Congress could not perform. Surely sixch an extraordinary power should not be added to by judicial legislation on the part of the courts *491of the several 'states. A treaty should, perhaps, “be construed so as to carry out the apparent intention of the parties to secure equality and reciprocity between them.” See Geofroy v. Biggs, supra. But “there are restraints which arise from the nature of the government itself and that of the states,” and no new treaty should be made by the courts of the several states, and no new provisions should be judicially written into the national contracts.
Not only is this the case, but we believe the omission of the property of citizens of the United States when residing in the United States from the scope of the treaty was purposely made.
Home rule is certainly a cardinal principle of the American political system. It cannot be believed that the American Constitution would ever have been ratified by the several states if these states had ever believed that their taxing power could be taken away by the act of the President and two thirds of the Senate, and that the transmission of the property of their own citizens could be thus interfered with. The treaty-making power may apply to the rights of citizens of foreign nations in the United States and citizens of the United States in foreign •states, but it surely does not apply, and the terms of the treaty in question do not make, it apply, to the rights of citizens of the United States resident within the United States. If any such power had been intended at the time of the adoption of the Constitution, “it,” to use the language of Mr. Justice Cooley, but in another connection, “would be somewhat startling to our people and would be likely to lead thereafter to a more careful scrutiny of the charters of government framed by them, lest, sometime, by an inadvertent use of words, they might be found to have conferred upon some agency of their own the legal authority to take away their liberties altogether.” See People ex rel. Le Roy v. Hurlbut, 24 Mich. 97, 9 Am. Rep. 103.
The judgment of the District Court is reversed and the cause is remanded for further proceedings according to law.
Biedzéll, J., being disqualified, did not participate, and How. A. G. Burr, Judge of the Ninth Judicial District, sat in his place.