Eben Knowlton v. Frank Moore
| Citation | 178 U.S. 41,20 S.Ct. 747,44 L.Ed. 969 |
| Decision Date | 14 May 1900 |
| Docket Number | No. 387,387 |
| Parties | EBEN J. KNOWLTON and Thomas A. Buffum, Executors of the Last Will and Testament of Edwin F. Knowlton, Deceased, Plffs. in Err. , v. FRANK R. MOORE, United States Collector of Internal Revenue, First Collection District, State of New York |
| Court | United States Supreme Court |
Solicitor General Richards for defendant in error.
The act of Congress of June, 1898, which is usually spoken of as the war revenue act (30 Stat. at L. 448, chap. 448), imposes various stamp duties and other taxes. Sections 29 and 30 of the statute, which are therein prefaced by the heading 'Legacies and Distributive Shares of Personal Property,' provide for the assessment and collection of the particular taxes which are described in the sections in question. To determine the issues which arise on this record it is necessary to decide whether the taxes imposed are void because repugnant to the Constitution of the United States, and, if they be valid, to ascertain and define their true import.
The controversy was thus engendered: Edwin F. Knowlton died in October, 1898, in the borough of Brooklyn, state of New York, where he was domiciled. His will was probated, and the executors named therein were duly qualified. As a preliminary to the assessment of the taxes imposed by the provisions of the statute, the collector of internal revenue demanded of the executors that they make a return showing the amount of the personal estate of the deceased, and disclosing the legatees and distributees thereof. The executors, asserting that they were not obliged to make the return because of the unconstitutionality of §§ 29 and 30 of the statute, nevertheless complied, under protest. The report disclosed that the personal estate was appraised at $2,624,029.63, and afforded full information as to those entitled to take the same. The amount of the tax assessed was the sum of $42,084.67. This was reached according to the computation shown in the table which is printed in the margin.£
[See opposite page.]
Furniture $ 1,065.
Cash legacy 100,000.
Income for life on residuary
estate, amounting to $2,348,734.67.
Countess Sierstofpff became 28 years
of age on July 2, 1898. Present value
of her life interest in said residuary
estate, estimated according to United
States tables is $1,630,931.35
Total
George W. Knowlton.................................................
Charlotte A. Batchelor.............................................
Eben J. Knowlton...................................................
$1,731,996.35
100.00
5,000.00
100,000.00
5,000.00
____717,803.00
$2,559,899.65
$1,731,996.35
100.00
5,000.00
100,000.00
5,000.00
$1,842,096,35
2.25
2.25
2.25
2.25
15.
38,969.92
2.25
112.50
2,250.00
750.00
It is apparent, from the table, that the collector, whilst levying the tax on the legacies and distributive shares, or the right to receive the same, yet, for the purpose of fixing the rate of the tax, took into view the whole of the personal estate of the deceased. That is, whilst the tax was laid upon the legacies, the rate thereof was fixed by a separate and distinct right or thing, the entire personal estate of the deceased. The executors protested against the entire tax, and also as to the method by which it was assessed. The grounds of the protest were as follows:
'1. The provisions of the act of Congress under which it is sought to impose, assess, and collect the said tax or duty are in violation of the provisions of article 1, sections 8 and 9, of the Constitution of the United States, and are therefore void.
'2. The legacies to George W. Knowlton, Charlotte A. Batchelor, the Unitarian Church of West Upton, Mass., each amount to less than $10,000, and are not subject to any tax or duty under the said provisions of the said act of Congress, even if such provisions be not unconstitutional and void.
Demand having been made by the collector for the payment, accompanied with a threat to distrain in case of refusal, the tax was paid under written protest, which repeated the grounds above stated. In the receipt given it was recited that the tax had been paid under protest to avoid the use of compulsory process. A petition for refunding was subsequently presented by the executors, in which the grounds of the protest were reiterated. The commissioner of internal revenue having made an adverse ruling, the present suit was commenced to recover the amount paid. The facts as to the assessment and collection of the taxes were averred, and the refusal of the internal revenue commissioner to refund was alleged. The petition for refunding was made a part of the pleadings. The right to repayment was based upon the averment that the sections of the statute, under authority of which the amount had been assessed and collected, were unconstitutional. The circuit court sustained a demurrer, on the ground that no cause of action was alleged. The claim was rejected, and the suit was dismissed with costs.
The questions which arise on this writ of error to review the judgment of the circuit court are fourfold: First, that the taxes should have been refunded because they were direct taxes, and not being apportioned were hence repugnant to article 1, section 8, of the Constitution of the United States; second, if the taxes were not direct, they were levied on rights created solely by state law, depending for their continued existence on the consent of the several states, a volition which Congress has no power to control, and as to which it could not, therefore, exercise its taxing authority; third, if the taxes were not direct, and were not assessed upon objects or rights which were beyond the reach of Congress, nevertheless the taxes were void, because they were not uniform throughout the United States, as required by article 1, section 9, of the Constitution of the United States; fourth, because, although the taxes be held to have been in all respects constitutional, nevertheless they were illegal, since in their assessment the rate of the tax was determined by the aggregate amount of the personal estate of the deceased, and not by the sum of the legacies or distributive shares, or the right to take the same, which were the objects upon which by law the taxes were placed.
Although it may be, in the abstract, an analysis of these questions is logical sequence would require a consideration of the propositions in the order just stated, we shall not do so for the following reasons: The inquiry whether the taxes are direct or indirect must involve the prior determination of the objects or rights upon which by law they are imposed and assessed, since it becomes essential primarily to know what the law assesses and taxes in order to completely learn the nature of the burden. So, also, to solve the contention as to want of uniformity, it is requisite to understand not only the objects or rights which are taxed, but the method ordained by the statute for assessing and collecting. This must be the case, since uniformity, in whatever aspect it be considered, involves knowledge as to the operation of the taxing law, an understanding of which cannot be arrived at without a clear conception of what the law commands to be done. For these reasons we shall first, in a general way, consider upon what rights or objects death duties, as they are termed in England, are imposed. Having, from a review of the history of such taxes, reached a conclusion on this subject, we shall decide whether Congress has power to levy such taxes. This being settled, we shall analyze the particular act under review, for the purpose of ascertaining the precise form of tax for which it provides and the mode of assessment which it directs. These questions being disposed of, we shall determine whether the taxes which the act imposes are void, because not apportioned, or for the want of uniformity.
It is conceded on all sides that the levy and collection of some form of death duty is provided by the sections of the law in question. Bearing this in mind, the exact form of the tax and the method of its assessment need not be presently defined, since doing so appropriately belongs to the more specific interpretation of the statute to which we...
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