268 U.S. 137 (1925), 227, Stebbins and Hurley v. Riley

Docket Nº:No. 227
Citation:268 U.S. 137, 45 S.Ct. 424, 69 L.Ed. 884
Party Name:Stebbins and Hurley v. Riley
Case Date:April 13, 1925
Court:United States Supreme Court

Page 137

268 U.S. 137 (1925)

45 S.Ct. 424, 69 L.Ed. 884

Stebbins and Hurley



No. 227

United States Supreme Court

April 13, 1925

Argued March 9, 1925




1. The California Inheritance Tax Law of 1917, § 2, subdiv. 10, by providing that, in determining the market value of the property transferred for the purpose of fixing the amount of tax, no deduction should be made of the Federal Estate Tax (assessed upon the whole estate) resulted in a much larger proportionate tax on the succession to the residuum of an estate when the estate was large than when it was small, though the residuary bequest and

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the residuary estate were equal in each instance. Held consistent with the due process and equal protection clauses of the Fourteenth Amendment. P. 140.

2. There are too elements in the transfer of decedent's estate, exercise of the legal power to transmit at death and privilege of succession, and both may be made the basis of classification in a single state taxing statute, so that the amount of tax which a legatee shall pay may be made to depend both on the total net amount of the decedent's estate subject to the jurisdiction of the state and passing under its inheritance and testamentary laws and the amount of the legacy to which the legatee succeeds under those laws. P. 144.

191 Cal. 591 affirmed.

Error to a judgment of the Supreme Court of California sustaining, on review, a judgment of the Superior Court confirming an assessment of inheritance taxes.

STONE, J., lead opinion

MR. JUSTICE STONE delivered the opinion of the Court.

This case is here on a writ of error to the Supreme Court of California to review the determination of that court upholding the constitutionality of the Inheritance Tax Act of the State of California enacted in 1917, particularly subdivision 10 of § 2 of the Act, which prescribes the

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method of determining the market value of the property transferred, for the purpose of fixing the amount of the tax. Subdivision 10 of § 2 reads as follows:

In determining the market value of the [45 S.Ct. 425] property transferred, no deduction shall be made for any inheritance tax or estate tax paid to the government of the United States.

The decedent left a gross estate exceeding $1,800,000, on which the federal estate tax amounted to the sum of $128,730.08. In fixing the amount of inheritance tax due to the State of California upon the residuary legacies, the state tax appraiser, acting pursuant to the provisions of Subdivision 10 of § 2, did not deduct the amount of federal estate tax. In consequence, the total amount of state tax assessed upon the residuary estate was $37,699.30 greater than it would have been had the federal estate tax been deducted from the residuum of the estate before fixing the amount of the state tax. The Superior Court of San Francisco County, having jurisdiction in the premises, confirmed the tax, and the Supreme Court of California, on writ of error, held that the tax was in accordance with the laws and the Constitution of California, and was not a denial of due process or equal protection of the laws under the Fourteenth Amendment of the Constitution of the United States. Stebbins v. Riley, 191 Cal. 591.

It is urged here that the California Inheritance Tax Act of 1917 is a succession tax; that the provision of the taxing law requiring that there shall be no deduction of the federal tax in fixing the fair value of the legacy on which the state tax is levied is an arbitrary discrimination, bearing no relation either to the persons succeeding to the decedent's estate or to the amount which the taxpayer taxes by succession, and that it is accordingly a taking of property without due process of law, and, because of the inequalities in the amount of the tax resulting

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from the application of the taxing statute to successions, there is a denial of the equal protection of the laws...

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