CASES

ARGUED AND DETERMINED

IN THE

UNITED STATES SUPREME COURT

OCTOBER TERM, 1919

(250 U. S. 519)

CENTRAL OF GEORGIA RY. CO. v.
WRIGHT, Comptroller General of
State of Georgia.

(Argued Jan. 21, 1919. Reversed with Costs

Feb. 3, 1919. Rehearing Granted as to Cer-
tain Specified Points and Denied as to All
Others Order of April 21, 1919. Reargued
Oct. 13 and 14, 1919. Decided Oct. 27, 1919.)
No. 30.

CONSTITUTIONAL LAW 137-TAXATION
365-MERGER OF RAILROADS NOT AFFECTING
EXEMPTION FROM TAXES BY CHARter.

Under the charters granted in 1845 to the Southern and the Muscogee Railroad Companies, making their roads taxable only in a certain way and to a certain amount, held, though the companies were later merged, there could be no further taxation of the leasehold of the lessee of the roads.

Mr. Justice McKenna, Mr. Justice Pitney, Mr. Justice Brandeis, and Mr. Justice Clarke dissenting.

from taxation upon the fee of the same roads.
524

Wright v. Central of Georgia R. Co., *236
U. S. 674, 35 Sup. Ct. 471, 59 L. Ed. 781. A

rehearing was granted on the question wheth

er the exemption thus adjudged to exist ex-
tends to portions of the plaintiff in error's
road let to it by the Southwestern Railroad
and the Muscogee Railroad, which were as-
sumed to be embraced in the decision but
were not specially discussed. The considera-
tion of the court was directed especially to
the charter of the Augusta and Waynesboro
Rail Road granted in 1838 and having fea
tures characteristic of the conception of rail-
roads then entertained. 236 U. S. 678, 679,
35 Sup. Ct. 471, 59 L. Ed. 781. It is argued
that the charters of the other lessors just
named, granted at a later date, even when
limiting the corporation's liability to taxa-
in a different way.
tion in similar words, should be construed

The charters of the Southwestern and the
Muscogee Railroads were not granted until

In Error to the Supreme Court of the State 1845, and while like the earlier ones they proof Georgia.

On rehearing. Decree on original hearing (248 U. S. 525, 39 Sup. Ct. 181, 63 L. Ed. 401)

to stand.

See also, 249 U. S. 590, 39 Sup. Ct. 387, 63 L. Ed. 791.

vided that the said railway and its appurtenances and all property therewith connected, or the capital stock of the said Rail Road Company, should not be subject to be taxed higher than one-half of one per cent. upon its annual net income, they did not contain the provisions that showed the Legislature *Messrs. T. M. Cunningham, Jr., and A. R. in 1838 to contemplate indifferently a revenue Lawton, both of Savannah, Ga., for plaintiff derived from using, from sharing, or from in error. letting the special privileges granted-proviMr. Warren Grice, of Macon, Ga., for sions that were of weight in the decision of defendant in error.

520

#523

the Court.

But we are satisfied that between 1838 and

*Mr. Justice HOLMES delivered the opin- 1845 there had been no such change in the ion of the Court.

In this case it was decided at the last term that the plaintiff in error, the railway company, was exempt from liability to taxation as lessee of certain roads, 248 U. S. 525, 39 Sup. Ct. 181, 63 L. Ed. 401, as it had been decided a few terms earlier that it was exempt

policy of Georgia as to require the same
words to be given a different meaning at the
later date from that which we have decided
that they had at the former. Circumstances
had not changed when express power to let
was given in 1852. The Muscogee was merg-
ed in the Southwestern under an act of

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes
40 SUP.Cr.-1

1856, but the exemption remained superior | Amendment, recognizing a distinction between to legislative change. Southwestern R. R. citizenship of the United States and citizenship Co. v. Georgia, 92 U. S. 676, 23 L. Ed. 762. of one of the states, places beyond abridg As remarked by Chief Justice Waite in a ment by the states, are those which owe their like suit between the same parties, the lan-existence to the federal government, its national character, its Constitution, or its laws. guage of the exempting clause is somewhat unusual, and means the railroad specified in 4. CONSTITUTIONAL LAW 206 (1), 207(4)— STATE TRANSFER TAX DOES NOT INFRINGE ON RIGHTS OF CITIZENS.

*525 the charter and none other. Southwestern R. R. Co. v. Georgia, 116 U. S. 231, 6 Sup. Ct. 375, 29 L. Ed. 626. But conversely it means that that road shall be exempt while owned by this corporation whether used or

demised.

Act N. J. April 20, 1909 (P. L. p. 325), as amended by Act April 9, 1914 (P. L. p. 267), regulating and taxing the right to succeed to property in the state on the death of a nonresident owner, does not infringe any of the rights of citizenship, either of the states or of the United States, secured by Const. art. 4, § 2, par. 1, or the Fourteenth Amendment.

DISCRIMINATION IN TRANSFER TAX BASED ON
CITIZENSHIP AND RESIDENCE NOT UNCONSTI-
TUTIONAL.

We see nothing in the later statutes or Constitutions that attempts to substitute a new contract or to impair the obligation of the one originally made. Different opinions 5. CONSTITUTIONAL LAW 206(1), 207(4) — were entertained on the main question which this rehearing does not reopen; but taking that as settled we cannot believe that any real distinction can be made between the charter of the Augusta and Waynesboro and those of the Southwestern and Muscogee roads.

The decree of last term must stand and that of the state Court must be reversed. Decree reversed.

Mr. Justice MCKENNA, Mr. Justice PITNEY, Mr. Justice BRANDEIS and Mr. Justice CLARKE dissent.

(250 U. S. 525)

MAXWELL et al. v. BUGBEE, Comptroller of Treasury of State of New Jersey et al. HILL v. SAME.

(Argued March 18 and 19, 1919. Decided Oct. 27, 1919.)

Nos. 43, 238.

1. TAXATION 856, 859(1)-TRANSFER TAX IS ON RIGHT OF SUCCESSION WITHIN TAXING POWER OF STATE.

The tax imposed by Act N. J. April 20, 1909 (P. L. p. 325), §§ 1, 12, as amended by Act April 9, 1914 (P. L. p. 267), on the transfer by will or intestate law of property in the state of a nonresident decedent, is on the right of succession, a creature of local laws, and within the taxing power of the state, and is constitutional.

Any discrimination in Act N. J. April 20, 1909 (P. L. p. 325) §§ 1, 12, as amended by Act April 9, 1914 (P. L. p. 267), being based on deceased's residence within or without the state, Const. art. 4, § 2, par. 1, and the Fourteenth Amendment, as to privileges and immunities of citizens, are not strictly applicable. 6. CONSTITUTIONAL LAW

283-TRANSFER

TAX ON PROPERTY IN STATE OF NONRESIDENT
DECEDENT NOT WANTING IN DUE PROCESS.

Act N. J. April 20, 1909 (P. L. p. 325) §§ 1, 12, amended by Act April 9, 1914 (P. L. p. 267), by adopting as a measure of the tax on the transfer of property within the state of a nonresident decedent the proportion which does not in effect tax property beyond its juristhe local property bears to the entire estate, diction, and so amount to a deprivation of property without due process of law.

7. CONSTITUTIONAL LAW 229(1)-TRANSFER
TAX ON PROPERTY IN STATE OF NONRESIDENT
DECEDENT NOT WANTING IN EQUAL PROTEC-
TION OF LAW.

The equal protection of the law, which must be decided as between resident and nonresident decedents as classes, rather than by the incidents of a particular estate, is not denied by Act N. J. April 20, 1909 (P. L. p. 325), §§ 1, 12, as amended by Act April 9, 1914 (P. L. p. 267), adopting as the measure of the tax on the transfer of property within the state of a nonresident decedent the proportion of the local estate in certain property to the entire estate; the difference in the manner of assessment as between the two classes not being so wholly arbitrary and unreasonable as to be beyond the

2. CONSTITUTIONAL LAW 207(1) STATES legitimate authority of the state.

PROHIBITED TO DISCRIMINATE AGAINST CITI-
ZENS OF OTHER STATES.

Const. art. 4, § 2, par. 1, is intended to prevent discrimination by the several states against citizens of other states in respect of the fundamental privilege of citizenship.

3. CONSTITUTIONAL LAW

206(1)—PRIVILEGES AND IMMUNITIES PRESERVED TO CITIZENS

OF THE UNITED STATES ARE THOSE BASED
ON ITS CONSTITUTION AND LAWS.
The privileges and immunities of citizens
of the United States, which the Fourteenth

The Chief Justice, Mr. Justice Holmes, Mr. Justice Van Devanter, and Mr. Justice McReynolds, dissenting.

In Error to the Court of Errors and Appeals of the State of New Jersey.

Certiorari by Lawrence Maxwell and another, executors of James McDonald, deceased, against Newton A. K. Bugbee, Comptroller of the Treasury of the State of New Jersey, and another, to review an assess

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

(40 Sup.Ct.)

ment of a transfer tax, with a like proceed-, testate law, of property within the state, and ing by Louis W. Hill, administrator of James the decedent was a nonresident of the state at J. Hill, deceased. In the former case, judgthe time of his death." ment of the Supreme Court of New Jersey, affirming the tax, was affirmed by the Court of Errors and Appeals of that state (90 N. J. Law, 707, 101 Atl. 248); and in the latter case, judgment of the Supreme Court, modifying the tax, was affirmed by the Court of Errors and Appeals (92 N. J. Law, 514, 105 Atl. 893). Prosecutors bring error. Affirmed. In No. 43:

Messrs. Joseph Coult, of Newark, N. J., Lawrence Maxwell, of Cincinnati, Ohio, and William A. Smith, of Newark, N. J., for plaintiffs in error.

Messrs. John W. Westcott, of Camden, N. J., and John R. Hardin, of Newark, N. J., for defendants in error.

In No. 238:

The taxes thus imposed were at the rate of 5 per cent. upon the clear market value of the property, with exemptions not necessary to be specified, and were payable to the treasurer for the use of the state of New Jersey.

And by section 12 it was provided that upon the transfer of property in that state of a nonresident decedent, if all or any part of the estate, wherever situated, passed to persons or corporations who would have been taxable under the act if the decedent had been a resident of the state, such property located within the state was made subject to a tax bearing the same ratio to the entire tax which the estate of such decedent would have been subject to under the act if the nonresident decedent had been a resident of the

Messrs. E. C. Lindley, of St. Paul, Minn., and Joseph Coult and William A. Smith, both state, as the property located in the state of Newark, N. J., for plaintiff in error.

*532

bore to the entire estate of such nonresident Mr. John R. Hardin, of Newark, N. J., for decedent wherever situated. defendants in error.

530

The act, having first been amended by an act approved March 26, 1914 (P. L. 1914, p.

*Mr. Justice DAY delivered the opinion of 91), not necessary to be recited, was again the Court.

These cases were argued and submitted together, involve the same constitutional questions, and may be disposed of in a single opinion. The attack is upon the inheritance tax law of the state of New Jersey, and is based upon certain provisions of the federal Constitution. The statute has reference to the method of imposing inheritance taxes under the laws of the state. The constitutionality of the law upon both state and federal grounds was upheld in the McDonald Case by

531

the Court of Errors and *Appeals. 90 N. J. Law, 707, 101 Atl. 248. In the Hill Case the judgment of the Supreme Court of New Jersey (91 N. J. Law, 454, 103 Atl. 861) was affirmed by the Court of Errors and Appeals (92 N. J. Law, 514, 105 Atl. 893).

The statute under consideration is an act approved April 9, 1914, (P. L. 1914, p. 267), being an amendment to an act approved

April 20, 1909 (P. L. 1909, p. 325), for taxing

amended by the act approved April 9, 1914, which is now under consideration (P. L. 1914, p. 267; 1 Supp. Comp. Stat. N. J. pp. 15381542). Sections 1 and 12 were amended, the former by confining the tax on the transfer of property within the state of nonresident decedents to real estate, tangible personal property and shares of stock of New Jersey corporations and of national banks located within the state; and by modifying the former rate of 5 per centum upon the clear market value of the property passing, which was and other charitable institutions, and of parsubject to exemptions in favor of churches ents, children, and other lineal descendants, etc., by making 5 per centum the applicable rate, but subject to numerous exceptions, and in the excepted cases imposing different rates, dependent upon the relationship of the beneficiary to the deceased and the amount of the property transferred. Thus:

dren, husband or wife, of a decedent, or to the

"Property transferred to any child or chil

the transfer of property of resident and nonresident decedents by devise, bequest, descent, shall be taxed at the rate of one per centum issue of any child or children of a decedent, etc., in certain cases. The 1909 act is found on any amount in excess of five thousand dolin 4 Comp. Stat. N. J. p. 5301 et seq; the lars, up to fifty thousand dollars; one and amendment, in 1 Supp. Comp. Stat. N. J. pp. one-half per centum on any amount in excess 1538-1542. The act of 1909, in its first sec- to [of] fifty thousand dollars, up to one huntion, imposed a tax upon the transfer of any dred and fifty thousand dollars; two per property, real and personal, of the value of centum on any amount in excess of one hun$500 or over, or of any interest therein or in- dred and fifty thousand dollars, up to two huncome therefrom, in trust or otherwise, to per-dred and fifty thousand dollars; and three per sons or corporations including the following

cases:

"First. When the transfer is by will or by the intestate laws of this state from any person dying seized or possessed of the property

while a resident of the state.

centum on any amount in excess of two hundred and fifty thousand dollars."

The modified formula for computing the assessment upon the transfer of the estate of a nonresident decedent prescribed in section

12 as amended by the act under consideration,

"Second. When the transfer is by will or in- is as follows: