Appeal of Nettleton

• Decision Date: 18 December 1903
• Citation: 56 A. 565,76 Conn. 235
• Parties: Appeal of NETTLETON.
• Court: Connecticut Supreme Court

56 A. 565

76 Conn. 235

Appeal of NETTLETON.

Supreme Court of Errors of Connecticut.

Dec. 18, 1903.

Appeal from Superior Court, New Haven County; George W. Wheeler, Judge.

In the matter of the estate of Owen B. Arnold, deceased. From an order of the probate court ascertaining the amount of an inheritance tax, and directing its payment to the state, Charles H. Nettleton, executor of the estate of Owen B. Arnold, appealed to the superior court, and the State Treasurer appeared on behalf of the state and demurred to the appeal. Case reserved for the advice of the Supreme Court of Errors. Superior court advised to sustain the demurrer and dismiss the appeal.

The court of probate for said district of Meriden made the following order: "Estate of Owen B. Arnold. Late of Meriden, in Said District, Deceased. It appearing to the court from the inventory of the above estate that the total property of said estate at the time of said inventory was as follows, to wit:

"And it further appearing that, for the purpose of fixing the inheritance tax upon said estate, the amount of said inventory is subject to the following deductions:

Real estate

$ S.900 00

Personal property

242,738 87

Total

$251,638 87

"And it further appearing that, for the purpose of fixing the inheritance tax upon said estate, the amount of said inventory is subject to the following deductions:

（）(a) Foreign assets

$75,832 00

(b)Statutory exemption

10,000 00

(c) Debts and expenses of administranion

9,121 13

(d) United States internal revenue tax

4,492 78

Total

$99,445 91

—Leaving a balance subject to the inheritance tax of $152, 192.96.

"And it further appearing that the legacies given under said will are to St. Andrew's Parish, Meriden," etc.; "and that none of said legatees are within the relation of parent, husband, wife, lineal descendant, or legally adopted child of the testator.

"And it further appearing that by the provisions of section 2368 of the General Statutes of Connecticut, Revision of 1902, all of such legacies are subject to a succession tax of 3 per cent. of their value.

"Now, therefore, it is hereby ordered that Charles H. Nettleton, executor under the will of said Owen B. Arnold, shall forthwith pay to the Treasurer of the state of Connecticut the sum of $4,565.79, being the amount of said succession tax, together with interest thereon at the rate of 9 per cent. per annum from the 12th day of September, 1901, being one year after the qualification of such executor, said interest amounting to $674.39."

The material sections of the General Statutes governing this action of the court of probate are given in the note.¹

The executor appealed from this order to the superior court. His reasons of appeal consist of an allegation that the legislative act under which the court of probate directed the executor to pay the succession tax in question is null and void, and assigns four grounds of invalidity. These grounds, briefly stated in their appropriate order, are: (1) The act exceeds the legislative power of taxation; (2) the act violates the fourteenth amendment of the Constitution of the United States; (3) the act transcends the limitations arising from those fundamental conceptions of free government which underlie all constitutional systems; (4) the act violates the fundamental principles of the social compact. The State Treasurer appeared on behalf of the state and demurred to the reasons of appeal. Upon stipulation and agreement of the parties, the superior court reserved the questions of law arising in said cause, and upon the appellant's reasons of appeal, and the appellee's demurrer, and what judgment should be rendered, for the advice of this court.

Edward A. Harriman, for Charles.

H. Nettleton. Donald T. Warner and William A. King, Atty. Gen., for the State.

HAMERSLEY, J. (after stating the facts). Are sections 2367-2377, inclusive, of the General Statutes of 1902, which constitute the act of the Legislature under which the decree of the court of probate was passed, null and void, for any one of the reasons assigned by the appellant? If the act exceeds the legislative power of taxation, it violates the provisions of our state Constitution; it is not law; the person subjected to such taxation is deprived of his property by a means not clearly warranted by the law of the land (that is, without due process of law), and the person thus deprived of property without due process of law may invoke the national protection afforded through the fourteenth amendment; and so the first and second grounds of invalidity are closely related, and may more conveniently be treated as one ground.

The act may exceed the legislative power of taxation because the particular exaction imposed is not within the scope of that power as vested in the General Assembly by the Constitution, or because the act, in laying a tax within the scope of that power, lays it in such manner or for such purpose as to violate some provision or limitation of the Constitution. The act imposes death duties, and prescribes their amount and the machinery convenient for their collection. A tax of this kind has been defined as "an exaction made by the state in the regulation of the right of devolution of property of decedents, which is created by law, and which the law may restrain or regulate." In Matter of Sherman's Estate, 153 N. Y. 1, 4, 46 N. E. 1032. 1033. Some form of death duty has been used as a mode of taxation from ancient times. When the United States Constitution was adopted, death duties had been in use in England, as well as elsewhere, and were an established mode of taxation known to the people, who, in the exercise of the sovereignty vested in them, enacted that fundamental law. The imposition of death duties must therefore have been included in the broad power of taxation granted to the Legislature by the Constitution. This is true of our state Constitution. Soon after the organization of the federal government Congress imposed death duties, and has used this mode of taxation at intervals until the present time. The same mode of taxation has been practiced by many of the state Legislatures. Such laws have been frequently attacked as unconstitutional, but their validity is too firmly established by many decisions to be now questioned. It is sufficient to refer to the leading case of Knowlton v. Moore, 178 U. S. 41, 20 Sup. Ct. 747, 44 L. Ed. 969. In the opinion announced by Mr. Justice White, the whole subject is discussed with exhaustive fullness, and the proposition that death duties are an established mode of taxation, and clearly within the power of taxation granted to the Legislature, is demonstrated. If, therefore, the act under discussion exceeds the legislative power, it must be because, in the manner of laying the tax or the purpose of its imposition, some provision of our Constitution is violated. The only provision of our Constitution to which this act can be claimed to be obnoxious is that which results by clear implication from the declaration of rights contained in article 1, and which secures to every citizen equal protection in the enjoyment of those civil rights common to all, and which stamps with invalidity laws which select any person or persons for gratuitous privileges, or for arbitrary and hostile discrimination in the imposition of burdens or limitations on their harmless action. State v. Conlon, 65 Conn. 478, 489, 33 Atl. 519, 31 L. R. A. 55, 48 Am. St Rep. 227. The Constitutions of many of the states contain, in some form, the maxim, "Taxation should be equal and uniform." This maxim may be apposite and useful if addressed to the conscience and judgment of legislators in exercising the power of taxation, but when it was incorporated into a Constitution as a limitation on that power, which courts might be called upon to interpret and enforce, it became a fruitful source of litigation, which taxed the ingenuity of courts. This difficulty was most keenly felt when courts were called upon to reconcile the unquestioned power of taxation, through the imposition of death duties, with the constitutional provision requiring uniformity and equality in taxation. Such legislation generally involved, and in some instances to a marked degree, the violation of the rule of uniformity in rate and of equality in operation. The difficulty was overcome partly through an application of the theory, found useful in other tax troubles, that the rule of equality did not apply to the people as a whole, or to property in general, but only to persons and property after they had been classified for purposes of taxation. More reliance, however, was placed upon the theory that imposition of death duties is not taxation, within the meaning of the troublesome maxim; that inasmuch as the process by which the state assumes the care of property upon the death of its owner, and secures its distribution to the objects designated by him in his will, or to the persons designated by the law of intestacy, is the creature of statute, which the state may alter or abrogate at pleasure, therefore the power of its owner to so transfer property, through his death, and of his legatee or the distributee of his estate to so receive the property, is a privilege granted by the state, which may properly dictate the terms on which the privilege may be enjoyed. Upon this theory, laws for collecting taxes by way of death duties which disregard uniformity in rate, and involve gross inequality in operation, have been held valid by courts of last resort in states whose Constitutions require uniformity and equality in taxation. Upon appeal in such a case the United States Supreme Court has not questioned this interpretation by state courts, and, accepting that interpretation, has held that the state tax involving the greatest inequality was not obnoxious to the fourteenth amendment, because the state Constitution contains no provision prohibiting the exercise of taxation in this...