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ARGUED AND DETERMINED
UNITED STATES SUPREME COURT
OCTOBER TERM, 1919
(250 U. S. 619)
from taxation upon the fee of the same roads. CENTRAL OF GEORGIA RY. CO. v.
•524 WRIGHT, Comptroller General of
Wright v. Central of Georgia R. Co., *236 State of Georgia.
U. S. 674, 35 Sup. Ct. 471, 59 L. Ed. 781. A (Argued Jan. 21, 1919. Reversed with Costs rehearing was granted on the question wheth
Feb. 3, 1919. Rehearing Granted as to Cer er the exemption thus adjudged to exist extain Specified Points and Denied as to All tends to portions of the plaintiff in error's Others–Order of April 21, 1919. Reargued road let to it by the Southwestern Railroad Oct. 13 and 14, 1919. Decided Oct. 27, 1919.) and the Muscogee Railroad, which were as
sumed to be embraced in the decision but No. 30.
were not specially discussed. The consideraCONSTITUTIONAL LAW 137–TAXATION en tion of the court was directed especially to
365—MERGER OF RAILROADS NOT AFFECTING the charter of the Augusta and Waynesboro EXEMPTION FROM TAXES BY CHARTER.
Rail Road granted in 1838 and having fea. Under the charters granted in 1845 to the tures characteristic of the conception of railSouthern and the Muscogee Railroad Compa- roads then entertained. 236 U. S. 678, 679, nies, making their roads taxable only in a
35 Sup. Ct. 471, 59 L. Ed. 781. It is argued certain way and to a certain amount, held, that the charters of the other lessors just though the companies were later merged, there could be no further taxation of the leasehold named, granted at a later date, even when of the lessee of the roads.
limiting the corporation's liability to taxaMr. Justice McKenna, Mr. Justice Pitney, in a different way.
tion in similar words, should be construed Mr. Justice Brandeis, and Mr. Justice Clarke dissenting.
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 pro of Georgia.
vided that the said railway and its appurOn rehearing. Decree on original hearing tenances and all property therewith connect(248 U. S. 525, 39 Sup. Ct. 181, 63 L. Ed. 401) | ed, or the capital stock of the said Rail Road to stand.
Company, should not be subject to be taxed Şee, also, 249 U. S. 590, 39 Sup. Ct. 387, higher than one-half of one per cent upon 63 L. Ed. 791.
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-provi. Mr. Warren Grice, of Macon, Ga., for sions that were of weight in the decision of defendant in error.
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.
policy of Georgia as to require the same In this case it was decided at the last term words to be given a different meaning at the that the plaintiff in error, the railway com- later date from that which we have decided pany, was exempt from liability to taxation that they had at the former. Circumstances as lessee of certain roads, 248 U. S. 525, 39 had not changed when express power to let Sup. Ct. 181, 63 L. Ed. 401, as it had been de- was given in 1852. The Muscogee was mergcided a few terms earlier that it was exempt ed in the Southwestern under an act of
For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes
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 lap- existence to the federal government, its naguage of the exempting clause is somewhat tional character, its Constitution, or its laws. unusual, and means the railroad specified in 4. CONSTITUTIONAL LAW 206(1), 207(4)— *525
STATE TRANSFER TAX DOES NOT INFRINGE ON the *charter and none other. Southwestern RIGHTS OF CITIZENS. R. R. Co. v. Georgia, 116 U. S. 231, 6 Sup. Act N. J. April 20, 1909 (P. L. p. 325), as Ct. 375, 29 L. Ed. 626. But conversely it amended by Act April 9, 1914 (P. L. p. 267), reg. means that that road shall be exempt while ulating and taxing the right to succeed to propowned by this corporation whether used or erty in the state on the death of a nonresident
owner, does not infringe any of the rights of cit. demised.
izenship, either of the states or of the United We see nothing in the later statutes or States, secured by Const. art. 4,.$ 2, par. 1, Constitutions that attempts to substitute a or the Fourteenth Amendment. new contract or to impair the obligation of
5. CONSTITUTIONAL LAW em 206(1), 207(4) – the one originally made. Different opinions
DISCRIMINATION IN TRANSFEB TAX BASED ON were entertained on the main question which
CITIZENSHIP AND RESIDENCE NOT UNCONSTIthis rehearing does not reopen; but taking
TUTIONAL, that as settled we cannot believe that any
Any discrimination in Act N. J. April real distinction can be made between the 20, 1909 (P. L. p. 325) 88 1, 12, as amended by charter of the Augusta and Waynesboro and Act April 9, 1914 (P. L. p. 267), being based those of the Southwestern and Muscogee on deceased's residence within or without the roads.
state, Const. art. 4, § 2, par. 1, and the FourThe decree of last term must stand and teenth Amendment, as to privileges and imthat of the state Court must be reversed.
munities of citizens, are not strictly applicable. Decree reversed.
6. CONSTITUTIONAL LAW Ow283—TRANSFER
TAX ON PROPERTY IN STATE OF NON RESIDENT Mr. Justice MCKENNA, Mr. Justice PIT- DECEDENT NOT WANTING IN DUE PROCESS. NEY, Mr. Justice BRANDEIS and Mr. Jus- Act N. J. April 20, 1909 (P. L. p. 325) $S tice CLARKE dissent.
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 (250 U. S. 525)
of a nonresident decedent the proportion which MAXWELL et al. v. BUGBEE, Comptroller does not in effect tax property beyond its juris
the local property bears to the entire estate, of Treasury of State of New Jersey et al.
diction, and so amount to a deprivation of propHILL V. SAME.
erty without due process of law.
7. CONSTITUTIONAL LAW 229(1)—TRANSFER (Argued March 18 and 19, 1919. Decided Oct. 27, 1919.)
TAX ON PROPERTY IN STATE OF NONRESIDENT
DECEDENT NOT WANTING IN EQUAL PROTECNos. 43, 238.
TION OF LAW,
The equal protection of the law, which 1. TAXATION 856, 859(1)-TRANSFER TAX IS must be decided as between resident and nonON BIGHT OF SUCCESSION WITHIN TAXING resident decedents as classes, rather than by
the incidents of a particular estate, is not denied The tax imposed by Act N. J. April 20, by Act N. J. April 20, 1909 (P. L. p. 325), 88 1909 (P. L. P. 325), 88 1, 12, as amended 1, 12, as amended by Act April 9, 1914 (P. L. p. by Act April 9, 1914 (P. L. p. 267), on the 267), adopting as the measure of the tax on the transfer by will or intestate law of property transfer of property within the state of a nonin the state of a nonresident decedent, is on the resident decedent the proportion of the local esright of succession, a creature of local laws, tate in certain property to the entire estate; the and within the taxing power of the state, and difference in the manner of assessment as beis constitutional.
tween the two classes not being so wholly arbi2. CONSTITUTIONAL LAW Om 207(1) — STATES legitimate authority of the state.
trary and unreasonable as to be beyond the PROHIBITED TO DISCRIMINATE AGAINST CITIZENS OF OTHER STATES.
The Chief Justice, Mr. Justice Holmes, Mr. Const. art. 4, § 2, par. 1, is intended to pre
Justice Van Devanter, and Mr. Justice Mevent discrimination by the several states against
Reynolds, dissenting. citizens of other states in respect of the funda
In Error to the Court of Errors and Apmental privilege of citizenship.
peals of the State of New Jersey. 3. CONSTITUTIONAL LAW 206(1)-PRIVILEG
Certiorari by Lawrence Maxwell and anES AND IMMUNITIES PRESERVED TO OF THE UNITED STATES ARE THOSE BASED other, executors of James McDonald, de ON ITS CONSTITUTION AND LAWS.
ceased, against Newton A. K. Bugbee, CompThe privileges and immunities of citizens troller of the Treasury of the State of New of the United States, which the Fourteenth Jersey, and another, to review an assess
For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes
POWER OF STATE.
(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, judg- the time of his death." ment of the Supreme Court of New Jersey,
The taxés thus imposed were at the rate of affirming the tax, was affirmed by the Court 5 per cent. upon the clear market value of of Errors and Appeals of that state (90 N. the property, with exemptions not necessary J. Law, 707, 101 Atl. 248); and in the latter to be specified, and were payable to the case, judgment of the Supreme Court, mod.
treasurer for the use of the state of New ifying the tax, was affirmed by the Court of
Jersey. Errors and Appeals (92 N. J. Law, 514, 105
And by section 12 it was provided that upAtl. 893). Prosecutors bring error. Affirmed.
on the transfer of property in that state of In No. 43:
a nonresident decedent, if all or any part of Messrs. Joseph Coult, of Newark, N. J., the estate, wherever situated, passed to perLawrence Maxwell, of Cincinnati, Ohio, and sons or corporations who would have been William A. Smith, of Newark, N. J., for taxable under the act if the decedent had plaintiffs in error.
been a resident of the state, such property Messrs. John W. Westcott, of Camden, N. located within the state was made subject J., and John R. Hardin, of Newark, N. J., for to a tax bearing the same ratio to the entire defendants in error.
tax which the estate of such decedent would
have been subject to under the act if the nonIn No. 238:
Messrs. E. C. Lindley, of St. Paul, Minn., resident decedent had been a resident of the and Joseph Coult and William A. Smith, both state, as the property located in the state
• 332 of Newark, N. J., for plaintiff in error.
bore to the *entire estate of such nonresident Mr. John R. Hardin, of Newark, N. J., for decedent wherever situated. defendants in error.
The act, having first been amended by an •330
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.
amended by the act approved April 9, 1914, These cases were argued and submitted to which is now under consideration (P. L. 1914, gether, involve the same constitutional ques- p. 267; 1 Supp. Comp. Stat. N. J. pp. 1538– tions, and may be disposed of' in a single 1542). Sections 1 and 12 were amended, the opinion. The attack is upon the inheritance former by confining the tax on the transfer of tax law of the state of New Jersey, and is property within the state of nonresident based upon certain provisions of the federal decedents to real estate, tangible personal Constitution. The statute has reference to property and shares of stock of New Jersey the method of imposing inheritance taxes un corporations and of national banks located der the laws of the state. The constitutional within the state; and by modifying the fority of the law upon both state and federal mer rate of 5 per centum upon the clear margrounds was upheld in the McDonald Case by ket value of the property passing, which was the Court of Errors and *Appeals. 90 N. J. subject to exemptions in favor of churches
and other charitable institutions, and of parLaw, 707, 101 Atl. 248. In the Hill Case the ents, children, and other lineal descendants, judgment of the Supreme Court of New Jersey (91 N. J. Law, 454, 103 Atl. 861) was af- etc., by making 5 per centum the applicable firmed by the Court of Errors and Appeals and in the excepted cases imposing different
rate, but subject to numerous exceptions, (92 N. J. Law, 514, 105 Atl. 893).
rates, dependent upon the relationship of the The statute under consideration is an act beneficiary to the deceased and the amount approved April 9, 1914, (P. L. 1914, p. 267), of the property transferred. Thus: being an amendment to an act approved April 20, 1909 (P. L. 1909, p. 325), for taxing dren, husband or wife, of a decedent, or to the
"Property transferred to any child or chilthe 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 centum on any amount in excess of two hundred
and fifty thousand dollars."
The modified formula for computing the "First. When the transfer is by will or by assessment upon the transfer of the estate of the intestate laws of this state from any person dying seized or possessed of the property 12 as amended by the act under consideration,
a nonresident decedent prescribed in section while a resident of the state.
“Second. When the transfer is by will or in. I is as follows:
"A tax shall be assessed on the transfer of , 018.43. Following the statute, the tax was property made *subject to tax as aforesaid, in were the estate of a resident of the state of
first ascertained on the entire estate as if it this state of a nonresident decedent if all or any part of the estate of such decedent, wher New Jersey, with all the decedent's property ever situated, shall pass to persons or corpora- both real and personal located there; the tions taxable under this act, which tax shall tax was then apportioned and assessed in the bear the same ratio to the entire tax which proportion that the tazable New Jersey estate the said estate would have been subject to bore to the entire estate. under this act if such nonresident decedent had been a resident of this state, and all his prop- the apportionment formula fixed by the stat
The thing complained of is that applying erty, real and personal, had been located within this state, as such taxable property within this ute, in the cases under review, results in a state bears to the entire estate, wherever situ- greater tax on the transfer of property of ated: Provided, that nothing in this clause the estates subject to the jurisdiction of New contained shall apply to any specific bequest or Jersey, than would be assessed for the transdevise of any property in this state."
fer of an equal amount, in a similar manner, An amendatory act, approved April 23, of property of a decedent who died a resident 1915 (P. L. 1915, p. 745; 1 Supp. Comp. Stat. of New Jersey. The cause of this inequality N. J. p. 1542), repeated the provision last is said to arise because of imposing the quoted, and made no change in the act per graduated tax, provided by the statute, upon tinent to the questions here presented.
estates so large as these. If a resident, in It is this method of assessment in the case the case of a wife or children, the first $5,of nonresident decedents which is the subject-000 of property is exempt, the next $45,000 matter in controversy.
is taxed at the rate of 1 per cent., the next James McDonald died January 13, 1915, $100,000 at the rate of 142 per cent., the next owning stock in the Standard Oil Company, a $100,000 at the rate of 2 per cent., and the reNew Jersey corporation, valued at $1,114,965, mainder at the rate of 3 per cent. The con. leaving an entire estate of $3,969,333.25, tention is that, applying the apportionment which included some real estate in the state rule provided in the case of nonresident esof Idaho. Of the entire estate, $279,813.17 | tates, a larger amount of tax is assessed.
*835 went to pay debts and expenses of administration. Mr. McDonald was a citizen of the from the application of the statute as made by
*The correctness of the figures deduced United States and a resident of the District the counsel for plaintiff in error is contested, of Columbia, and left a will and a codicil but in our view the differences are unimporwhich were admitted to probate by the Su- tant, unless the state is bound to apply the preme Court of that District. The executors
same rule to the transmission of both classes are Lawrence Maxwell, a citizen of Ohio, and
of estates. the Fulton Trust Company, a New York cor
Counsel for plaintiffs in error sum up their poration. The principal beneficiaries under the will are citizens and residents of states of objections to the statute, based on the federthe United States other than the state of New al Constitution, as follows: Jersey. Under the will the wife takes by
(1) \It taxes the estates of nonresidents specific legacies; the other beneficiaries are
more than those of residents, and therefore specific and general legatees not related to gives to residents privileges and immunities the deceased and a son and two grandchil- denied to nonresidents. dren, who take the residuary estate.
(2) It provides for a tax which bears unJames J. Hill died May 29, 1916, intestate, equally, and therefore is not imposed upon a
uniform rule, and it therefore denies to nona resident *and citizen of the state of Minne residents the equal protection of the laws. sota, leaving a widow and nine children.
(3) It taxes the transfer of a nonresident's Under the laws of Minnesota, the widow in- property over which the state of New Jersey herited one-third of the real estate and per- has no jurisdiction while it expressly omits sonal property, and each of the children two like property of residents, that is, real estate twenty-sevenths thereof. The entire estate without the state, and thereby deprives the descending amounted to $53,814,762, which nonresident of his property without due pro included real estate located outside of Newcess of law. Jersey, and principally in Minnesota and
 Before taking up these objections it is New York, valued at $1,885,120. The only necessary to briefly consider the nature of the property the transfer of which was subject tax. In Carr v. Edwards, 84 N. J. Law, 667, to taxation in New Jersey was stock in the 87 Atl. 132, it was held by the New Jersey Northern Securities Company, a New Jersey Court of Errors and Appeals to be a tax upcorporation, value at $2,317,564.68. The on the special right, the creation of the stat. debts and administration expenses amounted ute, of an executor or administrator of a nonto $757,571.20.
resident decedent to succeed to property harThe amount of the assessment in the ing its situs in New Jersey. Of section 12, as McDonald Case $29,071.68. In the it stood in the original act of 1909, the court Hill Case the tax assessed amounted to $67,- ) said: