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In answer to which the executors replied It will be observed that when Lévy died, that they were willing to do so, but that it May 26, 1904, and when the will was probatwas announced to them by the president of ed, May 30, 1904, there was no inheritance the school board of the parish that he in tax in Louisiana. The act in controversy tended to claim in behalf of said board a was passed June 28, 1904. tax under the inheritance tax law of the In support of the attack made upon the : state on the funds in their hands "and the law, it is contended that an inheritance shares coming to said movers." The exec
The exec- tax is not a tax on property, but on the utors also alleged the unconstitutionality of right or privilege of inheriting, and that the tax and prayed that the school board the right in the case at bar had been exerof the parish, through its president, Andrew cised at the moment of the testator's death H. Wilson, be made a party to the proceed- under the then-existing law, and “to pass ings. Wilson appeared and averred that the a law exacting such a tax and make it retaxes were due the state, and not to the troactive so as to devest a right previously school board, and were collectible by the acquired under then-existing laws is a depstate tax collector, and "that this suit and rivation of property already acquired, withthe matters at issue herein should be liti-out due process of law, prohibited by the gated contradictorily with the state tax 14th Amendment of the Constitution of the collector for the district in which the de- United States." ceased resided when he departed this life." To sustain their propositions the plain
The tax collector appeared. The agents tiffs in error cite certain articles of the and attorneys in fact of the legatees an-Louisiana Civil Code. And it is urged as swered the demand of the school board to be indubitable that, under the law of Louisipaid the tax that $10,000 of the estate was ana, a succession is acquired by the legal in United States bonds, and not subject to heir immediately after the death of the detaxation by the state, and averred that an ceased, and, by the express terms of the inheritance tax was not due “to said board Code, this rule applies to testamentary for the reason that said act has no applica- heirs, to instituted heirs, and universal legation to the property under this succession or the legacies due to said movers in the tees. In other words, that the acquisition motion aforesaid ; that to give it such appli- of the succession by plaintiffs in error was cation would be to make said act retroac- at the very moment of Levy's death, and, tive and devest the vested rights of the therefore, necessarily before the act imsaid movers in said rule, which would be in posing inheritance taxes was passed. To violation of the Constitution of this state, sustain their view plaintiffs in error cite a and especially article 166 thereof, and in violation of the Constitution of the United solely for the support of the public schools,
a tax upon all inheritances, legacies, and doStates of America, and especially § 9 of nations; provided, no direct inheritance or article 1, and the 5th and 14th Amendments donation to an ascendant or descendant, bethereof, and in violation of the laws of the low $10,000 in amount or value, shall be so state and of the land; that it would be a taxed; a special inheritance tax of 3 per cent deprivation of property without due process on direct inheritances or donations to asof law and a denial of the equal protection collateral inheritances and donations to col
cendants or descendants, and 10 per cent for of the laws, in violation of the 5th and 14th laterals or strangers; provided, bequests to Amendments of the Constitution of the educational, religious, or charitable institu; United States of America."
tions shall be exempt from this tax; and Judgment was rendered in favor of the provided, further, that this tax shall not be tax collector, condemning the executors to enforced when the property donated or inpay the tax, less the amount of United herited shall have borne its just proportion States bonds, and less the charitable and of taxes prior to the time of such donation
or inheritance; this tax to be collected on religious bequests. The judgment was af- all successions not finally closed and adminfirmed by the supreme court of the state. istered upon, and all successions hereafter
The law imposes a tax of 3 per cent "on opened. direct inheritances and donations to ascendants or descendants,” and 10 per cent upon the legal heir, who is called by law to the
Article 940. A succession is acquired by donations or inheritances to collaterals or inheritance, immediately after the death of strangers. It is provided that the tax is the deceased person to whom he succeeds. “to be collected on all successions not final
This rule applies also to testamentary ly closed and administered upon, and all heirs, to instituted heirs, and universal legsuccessions hereafter opened.”+
atees, but not to particular legatees.
Article 941. The right mentioned in the +Section 1. Be it enacted by the general preceding article is acquired by the heir, by assembly of the state of Louisiana, That the operation of the law alone, before he there is now, and shall hereafter be, levied,' has taken any step to put himself in posses
number of cases decided prior to the de- or it may exercise its power during any of cision of the case at bar, and the case of the time it holds the property from the legaTulane University v. Board of Assessors, tee. "It is not,” we said in the Perkins 115 La. 1026, 40 So. 445, decided since the case, "until it has yielded its contribution decision in the case at bar. Having estab- to the state that it becomes the property lished, as it is contended, that by operation of the legatee.” See also Carpenter v. of law the property is transmitted imme- Pennsylvania, 17 How. 456, 15 L. ed. 127. diately from the testator to the heirs, it is We must turn back, therefore, to the law also contended that from the very defini- of Louisiana for the solution of the ques. tion of an inheritance tax none could be im- tions presented in the case at bar. But we posed on plaintiffs in error as legatees of are not required to reconcile the Louisiana Levy.
decisions. We accept that in the case at For definitions of an inheritance tax bar as a correct interpretation of the Code plaintiffs in error adduce United States v. of the state. Nor may we regard Tulane Perkins, 163 U. S. 625, 41 L. ed. 287, 16 University v. Board of Assessors as irreconSup. Ct. Rep. 1073; Magoun v. Illinois cilable with it. That case was brought to Trust & Sav. Bank, 170 U. S. 283, 42 L. ed. enjoin the collection of state and city taxes 1037, 18 Sup. Ct. Rep. 594; Knowlton v. which had been assessed against the sucMoore, 178 U. S. 41, 44 L. ed. 969, 20 Sup. cession of A. C. Hutchinson. The plaintiff Ct. Rep. 747. The tax was defined in the university was the universal legatee of Perkins Case to be "not a tax upon the Hutchinson, and its property was exempt property itself, but upon its transmission by from taxation under the Constitution of the will or descent;" and in the Magoun Case, state. It is true the court said that the “not one on property, but one on the suc- Code of the state "leaves no room whatcession.” In Knowlton v. Moore it was ever for doubt or surmises as to the fact said that such taxes "rest in their essence of the property of a deceased person being upon the principle that death is the generat- transmitted directly and immediately to the ing source from which the particular taxing legal heir, or, in the absence of forced heirs, power takes its being, and that it is the to the universal legatee, without any interpower to transmit, or the transmission from mediate stage, when it would be vested in the dead to the living, on which such taxes the successive representative or in the legal are more immediately rested.” But these abstract called 'succession.'” definitions were intended only to distin But the decision in the case at bar was guish the tax from one on property, and it not overruled, but distinguished as follows: was not intended to be decided that the “The case of Levy's Succession, 115 La. 377, tax must attach at the instant of the 39 So. 37, was decided from considerations death of a testator or intestate. In other peculiar to an inheritance tax, and which words, we defined the nature of the tax; can have no application in the instant case. we did not prescribe the time of its imposi- This inheritance tax was held to be due tion. To have done the latter would have notwithstanding that, under the provisions been to prescribe a rule of succession of es of the Code, the ownership of the property tates, and usurp a power we did not and do passed to the heirs. The maxim, Le mort not possess.
There is nothing, therefore, saisit le vif, was expressly recognized.” in those cases which restrains the power of Both decisions, therefore, must be considthe state as to the time of the imposition of ered as correct interpretations of the Code the tax. It may select the moment of death, of the state. It is not our province to prosion, or has expressed any will to accept , cepting or renouncing, although he himself it.
have not accepted it, even in case he was Thus, children, idiots, those who are ig- ignorant that the succession was opened in norant of the death of the deceased, are not his favor. the less considered as being seised of the Article 945. The second effect of this right succession, though they may be merely is to authorize the heir to institute all the seised of right, and not in fact.
actions, even possessory ones, which the de. Article 942. The heir being considered ceased had a right to institute, and to prog. seised of the succession from the moment ecute those already commenced. For the of its being opened, the right of possession heir, in everything, represents the deceased, which the deceased had continues in the and is of full right in his place, as well for person of the heir as if there had been no his rights as his obligations. interruption, and independent of the fact Article 1609. When, at the decease of the of possession.
testator, there are no heirs to whom a proArticle 944. The heir being considered as portion of his property is reserved by law, having succeeded to the deceased from the the universal legatee, by the death of the instant of his death, the first effect of this testator, is seised of right of the effects of right is that the heir transmits the succes. the succession without being bound to desion to his own heirs, with the right of ac-' mand the delivery thereaf.
nounce one more decisive than the other, or rights have become fixed and vested on the to pronounce a contradiction between them, same day. Counsel say: "The closing of which the court which delivered both of the succession cannot affect the question as them has declared does not exist. We must to when the right of the heirs vested; and assume that the Tulane Case approved the cannot be a cause for differentiation among view expressed in the case at bar of the the heirs; and such a classification is purerights of legatees, as follows: “Furtherly arbitrary. Besides, such a classification more, we have said, the legatees acquired rests on the theory that the tax is one on no vested right to the property bequeathed property, when in fact it is one on the right which could enable them to successfully de- of inheritance.” But, as we understand, the fend their inheritance against the demand of supreme court made the validity of the tax the state for the inheritance tax. It was depend upon the very fact which counsel property within the limits of the state, attack as an improper basis of classification, which the state could tax, for purposes men- The court decided that the property betioned, until it had passed out of the suc queathed was property the state could tax, cession of the testator."
"until it had passed out of the succession of Plaintiffs in error also contended that the the testator.” It was certainly not imstatute denied them the equal protection proper classification to make the tax depend of the laws. This contention is based on the upon a fact without which it would have following provision of the statute: “This been invalid. In other words, those who tax to be collected on all successions not are subject to be taxed cannot complain that finally closed and administered upon, and they are denied the equal protection of the on all successions hereafter opened.” laws because those who cannot legally be
Successions which have been closed, it is taxed are not taxed. said, are exempt from the tax, and a dis- Judgment affirmed. crimination is made between heirs whose
27 S. C.-12.
SHROPSHIRE, WOODLIFF, & Co., it are conflicting. Re Westlund, 99 Fed. 399;
Re St. Louis Ice Mfg. & Storage Co. 147 Fed. BUSH et al., Trustees, etc.
752; Re North Carolina Car Co. (semble],
127 Fed. 178, where the right of the asBankruptcy-preferences-assigned claims
signee to priority was denied; Re Brown, for wages.
4 Ben. 142, Fed. Cas. No. 1,974 [act of The priority of payment of wages “due to workmen, clerks, or servants” given 1867, 14 Stat. at L. 517, chap. 176); Re by the bankruptcy act of July 1, 1898 (30 Harmon, 128 Fed. 170, where, on facts Stat. at L. 563, chap. 541, U. S. Comp. Stat. slightly but not essentially different, the 1901, p. 3447), $ 64, when earned within right of the assignee to priority was afthree months before the commencement of firmed. the bankruptcy proceedings, claims which had been assigned before the 30 Stat. at L. pp. 544, 563, chap. 541, U. S. proceedings, extends to
The bankruptcy law (act July 1, 1898, bankruptcy proceedings were begun.
Comp. Stat. 1901, p. 3447), in § 1, defines [No. 416.]
"debt" as including “any debt, demand, or
claim, provable in bankruptcy.” Section 64, Submitted December 20, 1906.
20, 1906. Decided under which priority is claimed in this case, January 7, 1907.
is, in the parts material to the determina
tion of the question, as follows: NA CERTIFICATE from the United ON
“Sec. 64. Debts which have priority.States Circuit Court of Appeals for the
b. The debts to have priority, exSixth Circuit presenting the question whether assigned claims for wages are entitled to cept as herein provided, and to be paid in priority of payment under the
bankrupt act. full, out of bankrupt estates and the order of payment, shall be
(4) wages Answered in the affirmative.
due to workmen, clerks, or servants which The facts are stated in the opinion.
have been earned within three months be. Messrs. Charles F. Benjamin and Rut er
fore the date of the commencement of proford Lapsley for Shropshire, Woodliff, & Co. ceedings, not to exceed three hundred dolMessrs. George D. Lancaster, John P. Till
lars to each claimant; man, J. H. Beal, and Williams & Lancaster
The precise inquiry is whether the right for Bush et al.
of prior payment thus conferred is attached Mr. Justice Moody delivered the opinion to the person or to the claim of the wageof the court:
earner; if to the person, it is available The appellees are trustees of the bank- only to him; if to the claim, it passes with rupt estate of the Southern Car & Foundry the transfer to the assignee. In support of Company. The appellants, before the com
the proposition that the right is personal mencement of the proceedings in bankrupt
to the wage-earner, and enforceable only
by him, it is argued that it is not wages cy, acquired by purchase and assignment a large number of claims for wages of work earned within the prescribed time which men and servants, none exceeding $300 in are given priority, but wages “due to workamount, and all earned within three months men, clerks, or servants;" that when the before the date of the commencement of the claim is assigned to another it is no longer
"due to workmen, clerks, or servants,” but proceedings in bankruptcy. The district court for the eastern district of Tennessee sented by him, lacks one of the characteris
to the assignee; and therefore, when prerendered a judgment disallowing priority to sented by him, lacks one of the characteristhese claims, because, when filed, they were
tics which the law makes essential to prinot “due to workmen, clerks, or servants.” ority. In this argument it is assumed that
On appeal to the circuit court of appeals the wages must be “due” to the earner at for the sixth circuit that court duly certi- the time of the presentment of the claim fied here for instructions the following ques
for proof, or, at least, at the time of the tion:
commencement of the proceedings in bank"Is an assignee of a claim for wages
ruptcy. Without that assumption the arearned within three months before the com- gument fails to support the conclusion. mencement of proceedings in bankruptcy
But the statute lends no countenance to against the bankrupt debtor entitled to pri- this assumption. It nowhere expressly or ority of payment, under § 64 (4) of the by fair implication says that the wages bankrupt act [30 Stat. at L. 563, chap. 541, must be due to the earner at the time of the U. S. Comp. Stat. 1901, p. 3447], when the presentment of the claim, or of the beassignment occurred prior to the commence- ginning of the proceedings, and we find no ment of such bankruptcy proceedings ?” warrant for supplying such a restriction.
The question certified has never been Regarding, then, the plain words of the passed upon by any circuit court of appeals, statute, and no more, they seem to be mereand in the district courts the decisions upon' ly descriptive of the nature of the debt to which priority is given. When one has in- judgment of the Circuit Court for the curred a debt for wages due to workmen, Southern District of Ohio in favor of declerks, or servants, that debt, within the fendant in an action to enforce the statulimits of time and amount prescribed by tory liability of a shareholder in a nationthe act, is entitled to priority of payment. al bank, with a direction to enter judgment The priority is attached to the debt, and for plaintiff. Affirmed. not to the person of the creditor; to the See same case below, 69 C. C. A. 609, 137 claim, and not to the claimant. The act Fed. 461. does not enumerate classes of creditors and confer upon them the privilege of priority Statement by Mr. Justice Day: in payment, but, on the other hand, enu- This case was begun in the United States merates classes of debts as "the debts to circuit court by John Hulitt as receiver of have priority.”
the First National Bank of Hillsboro, Ohio, In this case the Southern Car & Foundry against the Ohio Valley National Bank, to Company had incurred certain debts for recover the amount of an assessment upon wages due to workmen, clerks, or servants, certain shares of the stock of the Hillsboro which were earned within three months be- Bank, which had become insolvent, which fore the date of the commencement of pro- assessment was directed by the Comptroller ceedings in bankruptcy. These debts were of the Currency in accordance with the proexactly within the description of those to visions of the national bank act. The case which the bankruptcy act gives priority of was tried upon an agreed statement of payment, and they did not cease to be with facts, from which it appears that on March in that description by their assignment to 18, 1893, one Overton S. Price, for a loan another. The character of the debts was of $10,000, gave his promissory note of that fixed when they were incurred, and could date to the Ohio Valley Bank, due ninety not be changed by an assignment. They days after date, payable to his own order were precisely of one of the classes of debts and indorsed by him, and deposited as colwhich the statute says are “debts to have lateral security for the note, among other priority.”
securities, fifty shares of stock of the said The question certified is answered in the First National Bank of Hillsboro, Ohio. affirmative, and it is so ordered.
The note had a power of sale attached to it, signed by Price, and authorizing the holder to sell or collect any portion of the
collateral, at public or private sale, on the OHIO VALLEY NATIONAL BANK, Plff. in nonperformance of the promise, and at any Err.,
time thereafter, without advertising or JOHN HULITT, Receiver of the First otherwise giving Price notice, and providNational Bank of Hillsboro, Ohio.
ing that, in case of public sale, the holder
might purchase without liability to acNational banks-stockholder's liability-count for more than the net proceeds of who are stockholders.
the sale. The pledgee of national bank stock
On December 25, 1893, Price died, leaving as collateral security for a note, with power the note due and unpaid, and no payments of public or private sale for the liquidation have been made thereon except as hereinof the pledge, becomes the beneficial owner of such stock, and, as such, subject to the after stated. liability of a stockholder under U. S. Rev. On June 18, 1894, the bank made a transStat. § 5151, U. S. Comp. Stat. 1901, p. 3465, fer of the pledged stock of the First Nationwhere, after the death of the pledgeor, it al Bank of Hillsboro, and also of certain causes the stock to be registered in the other stock in the Dominion National Bank name of an employee with no beneficial of Bristol, Virginia, to one Henry Otjen, an interest, and afterwards indorses upon the note the supposed value of the stock as of employee of the bank, and pecuniarily irthe date of the credit, and presents the responsible.
responsible. The shares were transferred note, as reduced by the amount of such on the books of the banks and new certifivaluation, to the pledgeor's administrator, cates issued in the name of Otjen and dewho allows the claim in this form.*
livered to him on July 7, 1894. Otjen in
dorsed the certificates in blank. No money [No. 108.]
passed in consideration of the transfer, and Argued November 16, 1906. Decided Janu- none was expected, nor was any credit giv
en or indorsed on the note by reason there
of. N ERROR to the United States Circuit
Court of Appeals for the Sixth Circuit standing and agreement between Otjen and to review a judgment which reversed as the bank that Utjen should hold the stock
*Ed. Note.-For cases in point, see Cent, Dig. vol. 6, Banks and Banking, $ 70.
ary 7, 1907.