250 U.S. 525 (2019), Maxwell v. Bugbee

Citation:250 U.S. 525, 40 S.Ct. 2, 63 L.Ed. 1124
Party Name:Maxwell v. Bugbee
Case Date:October 27, 1919
Court:United States Supreme Court

Page 525

250 U.S. 525 (2019)

40 S.Ct. 2, 63 L.Ed. 1124




United States Supreme Court

Oct. 27, 1919




Article IV, § 2, par. 1, of the Constitution was intended to prevent discrimination by the several states against citizens of other states in respect of the fundamental privileges of citizenship. P. 537.

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The Fourteenth Amendment recognizes a distinction between citizenship of the United States and citizenship of one of the states, and its purpose in declaring that no state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States is not to transfer to the Federal government the protection of civil rights inherent in state citizenship, but to secure those privileges and immunities that owe their existence to the federal government, its national character, its Constitution, or its laws. P. 537. Slaughter-House Cases, 16 Wall. 36.

These privileges and immunities provisions do not prevent a state from taxing the privilege of succeeding by will or inheritance from a nonresident decedent to property within its jurisdiction. P. 538.

Quaere whether these privileges and immunities clauses are applicable when the alleged discrimination (in a state inheritance tax law) is based not on citizenship, but on the residence or nonresidence of the decedent? Id.

The fact that a state tax on the succession to local property of a nonresident decedent is measured by the ratio in value of such property to the entire estate, including real and personal property in other states, does not make it a tax on the property beyond the jurisdiction, and thus obnoxious to the due process clause of the Fourteenth Amendment. P. 539.

The difference between the relations to the resident and nonresident testators or intestates affords justification within the equal protection provision of the Fourteenth Amendment for measuring succession taxes in different ways. P. 540.

The question of equal protection must be decided between resident and nonresident decedents as classes, rather than by the incidence of the tax in particular cases. P. 543.

The New Jersey inheritance tax, as to estates of resident decedents, is measured on all the property passing testate or intestate under the law of the state (foreign realty excluded), with various exemptions and graduations based on relationship of beneficiaries and amounts received; as to estates of nonresidents, the tax on the transfer to the personal representative, respecting only local real and tangible personal property, stock of New Jersey corporations and of national banks located in the state, bears the same ratio to the entire tax which would be imposed under the act if the decedent had been a resident and all his property real and personal had been located within the state, as such property within the state bears to the entire estate wherever situate, specific devises or bequests of property within the state being excluded from this computation. Owing to

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the graduation and exemption feature, this plan of apportionment, in cases of certain large estates of nonresidents embracing large real estate and other assets in other state, resulted in greater taxes for the transfer of their property in New Jersey than would have been assessed for transfer of an equal amount of property of a decedent dying resident in the state. Held that such taxes did not infringe the privileges and immunities provision of Article IV of the Constitution, or the like provision, or the equal protection or due process clauses, of the Fourteenth Amendment.

90 N.J.L. 707; 2 id. 514, affirmed.

The cases are stated in the opinion.

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DAY, J., lead opinion

MR. JUSTICE DAY delivered the opinion of 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 the Court of Errors and

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Appeals. 90 N.J.L. 707. In the Hill case, the judgment of the Supreme Court of New Jersey (91 N.J.L. 454) was affirmed by the Court of Errors and Appeals (92 N.J.L. 514).

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 the transfer of property of resident and nonresident decedents by devise, bequest, descent, etc., in certain cases. The 1909 act is found in 4 Comp.Stat. N.J. p. 5301 et seq; the amendment, in 1 Supp.Comp.Stat. N.J. pp. 1538-1542. The Act of 1909, in its first section, imposed a tax upon the transfer of any property, real and personal, of the value of $500 or over, or of any interest therein or income therefrom, in trust or otherwise, to persons 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.

Second. When the transfer is by will or intestate law, of property within the state, and the decedent was a nonresident of the state at the time of his death.

The taxes thus imposed were at the rate of 5 percent 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 § 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 state, as the property located in the state bore to the

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entire estate of such nonresident decedent wherever situated.

The act, having first been amended by an act approved March 26, 1914 (P.L.1914, p. 91), not necessary to be recited, was again 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. 1538-1542). 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 percentum upon the clear market value of the property passing, which was subject to exemptions in favor of churches and other charitable institutions, and of parents, children, and other lineal descendants, etc., by making 5 percentum 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:

Property transferred to any child or children, husband or wife, of a decedent, or to the issue of any child or children of a decedent, shall be taxed at the rate of one percentum on any amount in excess of five thousand dollars, up to fifty thousand dollars; one...

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