Wallace v. Myers

• Decision Date: 28 March 1889
• Citation: 38 F. 184
• Parties: WALLACE et al. v. MYERS, Comptroller.
• Court: U.S. District Court — Southern District of New York

38 F. 184

WALLACE et al. v. MYERS, Comptroller.

United States Circuit Court, S.D. New York.

March 28, 1889

Cornelius Fiske, for complainants.

Charles F. Tabor, Atty. Gen., for defendant.

WALLACE J.

This is a suit to restrain the defendant, as comptroller of the city of New York, from collecting certain taxes assessed under the provisions of the act of the legislature of the state of New York of 1885, entitled 'An act to tax gifts, legacies and collateral inheritances in certain cases,' as amended by chapter 713 of the Laws of 1887. These laws impose a tax of 5 per centum upon the value of the property passing to any person not within certain degrees of consanguinity to the decedent by will or the intestate laws of the state, from any person who may die seised or possessed of the same while being a resident of the state, or which is within the state at the time of his death. The bill of complaint shows that in the present case there was included in the property of the decedent, upon which the tax was assessed, $28,000 of United States government bonds. The defendant has demurred to the bill. The contention for the complainants is that the legislation is unconstitutional, and, if valid, that as to the government bonds the tax is void. The decision in Re McPherson, 104 N.Y. 306, 10 N.E. 685, disposes of the objections to the legislation which rests upon the ground that it is in conflict with the constitution of the state and the cases of Mager v. Grima, 8 How. 490, and Carpenter v. Pennsylvania, 17 How. 456, meet most of those which assert that it is in contravention of the constitution of the United States. Inasmuch as the law operates alike on all property and persons similarly situated, and the assessment is made by a judicial officer after notice and opportunity to be heard by the persons interested, it does not conflict with the provisions of the fourteenth amendment of the constitution of the United States. Railroad Co. v. Richmond, 96 U.S. 521; Barbier v. Connolly, 113 U.S. 27, 5 S.Ct. 357; Wurts v. Hoagland, 114 U.S. 606, 5 S.Ct. 1086; Railroad Tax Cases, 115 U.S. 321, 6 S.Ct. 57.

The serious question in the case is whether the tax is void to the extent that the assessment was based upon the value of the United States bonds which were included in the property of the decedent. This question is fairly a debatable one, but seems to be satisfactorily answered by the consideration that the tax is not imposed upon the bonds, but is one upon the privilege of acquiring property by inheritance. The circumstance that incidentally under such a statute such bonds may have to be valued in order to ascertain the amount of the tax does not affect its essential nature as one upon the privilege, and not upon the bonds. The statute exacts compensation in the form of a tax, and measures the price according to the value of the inheritance; and the only purpose and effect of valuing the bonds when they form a part of the decedent's estate is to ascertain and measure the value of the privilege. Such a tax is no more one upon the bonds than an income tax is one upon the property out of which the income is derived, or an excise tax is one upon the articles manufactured or sold. The bonds are the subject of the appraisal, but the privilege is the subject of the tax. Inasmuch as it is lawful for the state to withhold altogether the privilege of acquiring property within its dominion by will or inheritance, whether the property consists of government bonds or anything else, it is lawful for the legislature to annex any conditions to the privilege which may seem expedient and do not conflict with the organic law of the state, or the constitution or laws of the United States. In the language of the court in Mager v. Grima, where a similar statute was under consideration:

'The law in question is nothing more than the exercise of the power which every state and sovereignty possesses, of regulating the manner and terms upon which property real or personal within its

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