291 U.S. 24 (1934), 84, City Bank Farmers Trust Co. v. Schnader

Docket Nº:No. 84
Citation:291 U.S. 24, 54 S.Ct. 259, 78 L.Ed. 628
Party Name:City Bank Farmers Trust Co. v. Schnader
Case Date:January 08, 1934
Court:United States Supreme Court

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291 U.S. 24 (1934)

54 S.Ct. 259, 78 L.Ed. 628

City Bank Farmers Trust Co.



No. 84

United States Supreme Court

Jan. 8, 1934

Argued November 9, 1933




1. Where the state law permits an action at law for recovery of a tax paid under protest, the taxpayer may pursue the same remedy in the federal court if the requisite diversity of citizenship and amount in controversy are present. P. 28.

2. Existence of a statutory remedy to test the validity of a tax appraisal by appeal to a particular state court, in which the party opposed to the taxpayer will be the state itself, will not affect the equity jurisdiction of the federal court to enjoin, since such a proceeding, even if regarded as an action at law, would be confined to the state court and would not be cognizable by the federal court, either originally or by removal. P. 29.

3. A proceeding in a state court, on appeal from a tax appraisal, wherein the court has jurisdiction to determine not only the valuation, but also the validity of the tax, and which is tried as a case between the taxpayer and the state as adversary parties, and results in a final judgment appealable to a higher court, is to be classified as a judicial, rather than an administrative, proceeding. P. 29.

4. To such a proceeding the principle that administrative remedies under state laws must be exhausted before an injunction against state officers is sought in the federal courts on constitutional grounds does not apply. P. 34.

5. A bill to enjoin the imposition and collection of a state inheritance tax as beyond the constitutional power of the state held not premature, although the assessment had not yet been completed, it appearing clearly by the allegations of the bill that the defendant state taxing officials believed the tax valid and would proceed to impose it if not restrained. P. 34.


Appeal from a decree of the District Court, of three judges, dismissing a bill to enjoin the Attorney General and the Secretary of Revenue of the Commonwealth of

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Pennsylvania from imposing and collecting an inheritance tax on personal property left by a New York decedent, which, as the plaintiff executor averred, had no taxable situs in the Commonwealth.

ROBERTS, J., lead opinion

MR. JUSTICE ROBERTS delivered the opinion of the Court.

The appellant, by a bill filed in the District Court for Eastern Pennsylvania, sought to enjoin the appellees, who are officials of the Commonwealth of Pennsylvania, from attempting to impose and collect an inheritance tax. Diversity of citizenship and an amount in controversy exceeding, exclusive of interest, $3,000, were averred. The bill sets forth that Thomas B. Clarke, a citizen and resident of the State of New York, died there in 1931 leaving a will under which appellant qualified as executor; that, at and before the time of Clarke's death, there was on exhibition in Pennsylvania a collection of paintings owned [54 S.Ct. 260] by him, of the estimated market value at the date of his death of $714,750; that these paintings had been loaned

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to the Pennsylvania Museum and School of Industrial Art, a nonprofit corporation, so that they might be exhibited in the museum of that institution; that the loan was negotiated orally, and was for an indeterminate period, but the pictures were to be returned to Clarke at any time upon his request. The bill then quotes he Act of Assembly of Pennsylvania1 whereby a transfer inheritance tax of a specified percentage of value is laid upon transfers, by will or the intestate laws, or property located within the Commonwealth, from a decedent not a resident of the Commonwealth at the time of his death; describes the procedure for the collection of the tax -- namely, that the Department of Revenue, whenever occasion may require, shall appoint an appraiser to appraise the value of the property, if subject to tax; appraisement shall be made after notice to the interested parties; the appraiser shall report his valuation in writing to the Department of Revenue; whereupon that department is required to give notice to all interested parties, and any person not satisfied with the appraisement may appeal to the Court of Common Pleas of Dauphin County, which may determine all questions of valuation and the liability of the appraised estate for the tax. The bill recites the appointment of an appraiser who duly notified the appellant of the proposed date of his appraisement; the making of a return, under protest, pursuant to instructions of the appellee Schnader, enumerating as property within the Commonwealth at the decedent's death the seventy-nine portraits in question, and denying taxable situs or taxability of the property in Pennsylvania; a hearing by the appraiser, who referred the question of taxability to the Department of Justice, of which the appellee Schnader is the head, and, pending a decision by him, postponed the appraisement indefinitely, and repeated

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requests for an immediate determination of tax liability in response to which the...

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