Bd. of Regents of Univ. of Wisconsin v. State

• Court: Illinois Supreme Court
• Writing for the Court: THOMPSON
• Citation: Bd. of Regents of Univ. of Wisconsin v. State, 404 Ill. 193, 88 N.E.2d 489 (Ill. 1949)
• Decision Date: 21 November 1949
• Docket Number: No. 31104.,31104.
• Parties: BOARD OF REGENTS OF UNIVERSITY OF WISCONSIN et al. v. STATE.

404 Ill. 193

88 N.E.2d 489

BOARD OF REGENTS OF UNIVERSITY OF WISCONSIN et al.

v.STATE.

No. 31104.

Supreme Court of Illinois.

Sept. 22, 1949.

Rehearing Denied Nov. 21, 1949.

Kemper K. Knapp, deceased, left the residue of his estate to the Board of Regents of the University of Wisconsin and the Regents filed objections to order entered assessing inheritance taxes.

The County Court, Cook County, Edmund K. Jarecki, J., held that the gift was to the State of Wisconsin and was within the Illinois Inheritance Tax Act and entered an order confirming the assessment of the tax and the Board of Regents appealed.

The Supreme Court, Thompson, C. J., held that the tax assessed was not a direct burden upon the Board of Regents even though it incidentally reduced the legacy and affirmed the judgment.Thomas E. Fairchild, Attorney General of Wisconsin, and George I. Haight, Chicago (Charles H. Lerch, Chicago, and Warren H. Resh, Madison, Wis., of counsel), for appellants.

Ivan A. Elliott, Attorney General (William C. Wines, Raymond S. Sarnow, and

James C. Murrary, Chicago, of counsel), for appellee.

THOMPSON, Chief Justice.

This is an appeal from the county court of Cook County, which affirmed an assessment of inheritance taxes made by the county judge of said county upon the passing by will of the residue of the estate of one Kemper K. Knapp, deceased, who died testate, a resident of Cook County, on February 23, 1944. The executors of the will filed an inheritance tax return on February 17, 1945, to which return was appended a written protest to the assessment of any tax which might be levied in respect to the passing of the residue of said decedent's estate. The residue amounted to $2,471,758.49, and was, by the eighth clause of the will, given to the Board of Regents of the University of Wisconsin.

On a hearing before the county judge an order was entered assessing inheritance taxes of $714,097.55. Objections were filed to the assessment and on a hearing in the county court of Cook County, the facts being stipulated, the court found that the Board of Regents of the University of Wisconsin is the State of Wisconsin for all purposes relevant to this case; that the gift was, in substance, a gift to the State of Wisconsin; that the University of Wisconsin is within the purview of the taxing provisions of the Illinois Inheritance Tax Act imposing a tax upon persons, institutions or corporations (Ill.Rev.Stat.1943, chap. 120, par. 375 et seq.), and entered an order confirming the assessment of the tax. This cause is now before us on direct appeal, the revenue of the State being involved.

It is the contention of appellants (1) that the act does not provide for a tax upon a bequest to a State and therefore does not cover the bequest here involved; (2) that the assessment in question is unconstitutional; and (3) that the Illinois Inheritance Tax Act cannot be applied against a sovereign State of the United States.

Appellants urge the questions before the court are: First: Does the Illinois Inheritance Tax Act by its terms provide for a tax upon a bequest to a sister State? Appellants contend that the State of Wisconsin is not a ‘person’ or an ‘institution’ or a ‘corporation’ within the meaning of the act. Second: Can the Illinois Inheritance Tax Act constitutionally provide for a tax on a sister State? Appellants contend that as a sovereign the State of Wisconsin cannot be taxed by the State of Illinois. This, of course, presents for determination the question of whether or not the bequest here was one to a ‘person,’ ‘institution,’ or ‘corporation,’ within the meaning of the Illinois Inheritance Tax Act, and whether or not Illinois can impose her inheritance tax on a bequest to the Board of Regents of the University of Wisconsin.

Appellants contend the Illinois act has no application to the instant bequest, citing the following language of the act: ‘A tax shall be and is hereby imposed upon the transfer * * * to persons, institutions or corporations, not hereinafter exempted, * * *.’ Ill.Rev. Stat.1943, chap. 120, par. 375. Appellants waive and renounce any rights to exemption under the act and rely solely on the proposition that the act has no application whatever. They rely on the well-settled rule that in construing statutes words must be given their common accepted meaning and that courts may not extend the clear meaning expressed in the terms of the statute. They point to the absence of the word ‘State’ in the pertinent section of the statute quoted above and contend that because the legislature did not use the word ‘State’ in other sections of the act, its absence in the taxing section must be taken as excluding Wisconsin from the purview of the act.

We are unable to grasp the importance of this contention in view of the act and the bequest, which, in part, reads as follows: ‘I direct my executor and my trustee to pay and turn over to the Board of Regents of the University of Wisconsin all the rest, residue and remainder of my estate.’ That the legatee named is a corporation is not only undisputed, but is expressly so declared by the statute of Wisconsin, which provides: ‘The board of regents and their successors in office shall constitute a body corporate by the name of ‘The Regents of the University of Wisconsin’.' St.Wis.1947, s 36.03. That the named legatee is also an instrumentality of Wisconsin forms the only basis of appellants' contention, but this in no way restricts the plain language of the statute of Wisconsin which created the corporate entity nor lessens the import of the plain language of the bequest which directed the payment of the residue to be made to the Board of Regents of the University of Wisconsin.

It is appellee's position that a corporation is not excluded from the application of the act by virtue of its being an instrumentality of a State, and counsel cite the case of People v. Richardson, 269 Ill. 275, 109 N.E. 1033. In the Richardson case a tax was assessed on an escheat to an Illinois county, and the county resisted on the ground that public corporations were not within the act. We held in that case the term ‘corporation,’ as used in the Inheritance Tax Act, was broad enough to include municipal corporations of every character and that the act applied to every corporation not afterwards exempted in said act.

Appellants seek to differentiate this case on the ground that the county was a corporation, but that Wisconsin was not. We find here a close analogy between an escheat to a county which, incidentally, is an arm of the State and the bequest in the instant case to the Board of Regents which is also, incidentally, an arm of the State of Wisconsin.

Further, in view of the amendment of the act in 1939 (Ill.Rev.Stat.1939, chap. 120, par. 401), which specifically exempted the State of Illinois and its political and corporate instrumentalities from the proper operation of the act, it would seem that appellants' contention as to the absence of the word ‘State’ from section 1 of the act is not founded on a sound basis. This legislation presents a clear inference that the State and its instrumentalities are included in the act unless specifically exempted. We find further support in the case of United Stats. v. Perkins, 163 U.S. 625, 16 S.Ct. 1073, 41 L.Ed. 287, which holds the United States is within the word ‘corporation’ as used in the New York act imposing an inheritance tax upon ‘persons' or ‘corporations' not exempt by law from taxation. From what we have above pointed out it is apparent that the act applies to the State of Wisconsin or its instrumentalities.

We are next confronted with the controlling question as to whether the Illinois act is constitutional as applied to the legacy here. It is the contention of appellants that the act is unconstitutional for the reason that Illinois may not impose legislation upon Wisconsin as applied to this legacy, that Wisconsin is a sovereign State and that Illinois cannot, as against her, impose restrictive legislation. That this is correct as an abstract proposition of law is amply supported by the authorities cited. Kansas, State of, v. Colorado, 206 U.S. 46, 27 S.Ct. 655, 51 L.Ed. 956. As applied to the instant contention, however, the only question seems to be whether the Illinois Inheritance Tax Act, as applied to the gift in question, violates those principles.

Appellants first assert that the Illinois act levies a tax upon the right to receive and not on the property itself. That is the well-settled rule in this State. In re Estate of Johnson, 389 Ill. 425, 59 N.E.2d 825;People v. Moses, 363 Ill. 423, 2 N.E.2d 724;People v. Estate of Strom, 363 Ill. 241, 2 N.E.2d 94;People v. Varel, 351 Ill. 96, 184 N.E. 209;People v. Tombaugh, 303 Ill. 591, 136 N.E. 453. Appellants then contend that the right to receive the legacy in question arises from the sovereignty of Wisconsin and the right as given to the Board of Regents of the University of Wisconsin by the statutes of that State is a sovereign right on which Illinois may not impose her legislation. No cases are cited on that point, but we find the decisions are to the contrary. In Kochersperger v. Drake, 167 Ill. 122, 47 N.E. 321,41 L.R.A. 446, this court said: ‘The laws of descent, and the right to devise and take under a will, within the state of Illinois owe their existence to the statute law of the state.’ To this same effect are National Safe Deposit Co. v. Stead, 250 Ill. 584, 95 N.E. 973, Ann.Cas.1912B, 430, and People v. Estate of Strom, 363 Ill. 241, 2 N.E.2d 94. We further find...