Drew v. Tifft

Decision Date14 February 1900
Docket Number11,932 - (212)
Citation81 N.W. 839,79 Minn. 175
CourtMinnesota Supreme Court

Petition in the district court for McLeod county for a writ of mandamus commanding M.C. Tifft, judge of the probate court of that county, to proceed with the distribution of the estate of George Drew, deceased, without requiring payment of the so-called inheritance or transfer tax provided for by Laws 1897, c. 293, and to make and enter the final decree requisite therefor. From an order, Cadwell, J., denying a motion for a peremptory writ, petitioner appealed. Reversed.


Equality of Taxation -- Inheritance Tax.

The mandate of equality of taxation, as near as may be, of section 1, article 9, of the state constitution, applies to inheritance taxes exactly as it does to taxes on property except as otherwise expressly provided in the last proviso to the section, relating to an inheritance tax law.

Laws 1897, c. 293, Unconstitutional.

Laws 1897, c. 293, which attempts to lay an inheritance tax, is unconstitutional for the reasons: (a) It excludes from its operation real property, and lays the tax upon inheritances of personal property alone; (b) it exempts from its operation persons and corporations whose property is exempt by law from taxation; (c) it allows a larger exemption to lineal heirs than to collaterals, and does not lay the tax on the excess of the value of the property received above a uniform exempted sum.

Lineal Heirs and Collateral Heirs.

The statute is not unconstitutional because it taxes collateral heirs and distributees at a higher rate than lineals, for the constitution expressly authorizes such graduation of the tax.

Haynes & Chase, for appellant.

Ripley & Brennan, by consent, filed a brief in behalf of appellant.

An inheritance or succession tax may be defined as an excise or duty upon the right of a person or corporation to receive property by devise or inheritance from another under the regulation of the state. State v. Switzler, 143 Mo 287, 328. It is not a tax on the property, but is in the nature of an excise on the privilege of receiving it under the laws of the state by way of devise or inheritance. To prevent evasions gifts created by instruments inter vivos, to take effect upon the death of the maker, are included. The state cannot impose unreasonable and unequal conditions on the privilege of enjoying a right given by general laws. Subject to this rule the power of the legislature over taxation is practically unlimited, except so far as restrained by constitution. Sanborn v. Commissioners, 9 Minn. 258 (273); Eyre v. Jacob, 14 Grat. 422.

Nearly all states hold that inheritance taxes, properly speaking, are not imposed on property, but on the privilege of receiving property by inheritance or devise, and that as taxes on property they cannot be sustained. Minot v. Winthrop, 162 Mass. 113; Magoun v. Illinois T. & S. Bank, 170 U.S. 283; Kochersperger v. Drake, 167 Ill. 122; In re Wilmerding, 117 Cal. 281; State v. Ferris, 53 Oh. St. 314; Wallace v. Myers, 38 F. 184; Dos Passos, Inher. Tax (2d Ed.) § 8; Gelsthorpe v. Furnell, 20 Mont. 299.

The intangible nature of this tax, as being one neither on the property nor on the person receiving it, but on the abstract right or privilege of succeeding to the property by will or inheritance, is shown by the fact that legacies to the United States are subject to state succession taxes, though states cannot tax the United States. U.S. v. Perkins, 163 U.S. 625; In re Merriam, 141 N.Y. 479; Dos Passos, Inher. Tax (2d Ed.) § 28. So likewise legacies of government bonds which are by law exempt from taxation are subject to inheritance taxes. In re Sherman, 153 N.Y. 1; Wallace v. Myers, supra; Strode v. Com., 52 Pa. St. 181; Dos Passos, Inher. Tax, § 27. In State v. Gorman, 40 Minn. 232 (declaring Laws 1885, c. 103, invalid), the tax was held to be one on the property of defendant. See State v. Mann, 76 Wis. 469; State v. Switzler, supra. In view of State v. Gorman, supra, Laws 1897, c. 293, was enacted. This act was copied from New York, whose constitution imposes no restriction on the taxing power.

The act is invalid because it exempts legacies to charitable corporations entirely, and partially exempts those to near relatives. Exemptions from taxation are strictly construed, and a general exemption from taxation has no reference to assessments for local improvements, nor to excise and similar taxes. 1 Desty, Taxn. 121; Cooley, Taxn. 207; Roosevelt v. Mayor, 84 N.Y. 108; Boston v. Mayor, 116 Mass. 181; Sheehan v. Good Samaritan, 50 Mo. 155; 25 Am. & Eng. Enc. 160; City of St. Paul v. St. Paul & S.C.R. Co., 23 Minn. 469. See Washburn M. O. Asylum v. State, 73 Minn. 343; Ramsey County v. Macalester College, 51 Minn. 437; Dos Passos, Inher. Tax, § 35; 25 Am. & Eng. Enc. 158; Miller's Exr. v. Com., 27 Grat. 110; In re Vassar's Will, 127 N.Y. 1.

The act is invalid because it provides for a tax on transfers of personal property only; and because it provides that the entire inheritance, if of a certain amount, or in excess thereof, shall be taxed; and because it provides for two fixed amounts depending on the relationship of the parties. Regardless of the amendment of 1894, the requirements of Const. art. 9, § 1, as to uniformity are broad enough to include inheritance taxes. Even if the original provision as to uniformity did not apply to inheritance taxes, the adoption of the amendment as a proviso to this section must be held to extend its commands to this class of taxes. Endlich, Interp. Stat. § 186. See Brown v. Maryland, 12 Wheat. 419; Voorhees v. U.S. Bank, 10 Pet. 449; Gibbons v. Ogden, 9 Wheat. 1; Noonan v. City of Stillwater, 33 Minn. 198. An affirmative grant of power, where the legislature would otherwise have more extensive powers than those purporting to be granted, is a denial by implication of any power in excess of the terms of the grant. State v. Holman, 58 Minn. 219; State v. Clough, 23 Minn. 17; State v. Gorton, 33 Minn. 345; Cooley, Const. Lim. (5th Ed.) § 64; Lowe v. Com., 3 Metc. (Ky.) 237; Durousseau v. U.S., 6 Cranch, 307, 312; State v. Daugherty, 5 Tex. 1; U.S. v. More, 3 Cranch, 159, 172. Taxes, whether on indebtedness or otherwise, must be uniform. State v. District Court of Hennepin Co., 33 Minn. 235; State v. Pioneer S. & L. Co., 63 Minn. 80; City of Faribault v. Misener, 20 Minn. 347 (396).

Placing the construction of the supreme court of New York on the act, it provides that taxes on legacies of less than $10,000 under section 2 shall be taxed if the entire amount of taxable legacies is over $10,000, while a legacy of the same amount would not be taxed if the entire amount of taxable legacies was under that amount; and the same in respect of section 1, changing the amounts. In re Hoffman, 143 N.Y. 327; In re Westurn, 152 N.Y. 93.

Cross, Hicks, Carleton & Cross, and Keith, Evans, Thompson & Fairchild, by consent, also filed a brief attacking the validity of Laws 1897, c. 293.

W. B. Douglas, Attorney General, and F. R. Allen, County Attorney for McLeod county, for respondent.

Enactments like Laws 1897, c. 293, impose a tax on the privilege of receiving property by inheritance or devise, and not on property itself. The right to take by devise or descent is the creature of the law and not a natural right. The usual limitation requiring uniformity in taxes on property does not apply. Magoun v. Illinois T. & S. Bank, 170 U.S. 283, 293; Mager v. Grima, 8 How. 490; Dos Passos, Inher. Tax, § 8; Eyre v. Jacob, 14 Grat. 422; Kochersperger v. Drake, 167 Ill. 122; In re Wilmerding, 117 Cal. 281; Gelsthorpe v. Furnell, 20 Mont. 299; In re Hoffman, 143 N.Y. 327; In re Bronson, 150 N.Y. 1; Wallace v. Myers, 38 F. 184; Minot v. Winthrop, 162 Mass. 113; State v. Hamlin, 86 Me. 495; Strode v. Com., 52 Pa. St. 181, 183; Clymer v. Com., 52 Pa. St. 189; Com. v. Herman, 16 Wkly. Notes Cas. 210; State v. Dalrymple, 70 Md. 294; Tyson v. State, 28 Md. 577. Other statutes somewhat in the form of impositions of taxes on inheritances, but by their terms clearly imposing taxes on the estates of deceased persons, as distinguished from the net amount of property inherited or devised, have been held unconstitutional, sometimes because the statute provided for double taxation, but generally as in violation of the rule of uniformity. This class of statutes is clearly distinguishable from that to which chapter 293 belongs. State v. Gorman, 40 Minn. 232; State v. Mann, 76 Wis. 469; State v. Switzler, 143 Mo. 287, 331. A third class of cases has arisen in which certain special restrictions in the constitutions of various states have been decided to operate as limitations on the exercise of this power. Curry v. Spencer, 61 N.H. 624; State v. Ferris, 53 Oh. St. 314. State v. Ferris was determined by a divided court and the reasoning is unsatisfactory. Both cases were distinguished in Magoun v. Illinois T. & S. Bank, supra, and the court comments upon Curry v. Spencer, as being "extreme."

In all cases in which this court has considered the limitations imposed by article 9, § 11, as originally adopted, only questions involving taxes on property have been involved. Noonan v. City of Stillwater, 33 Minn. 198, 201; Sanborn v. Commrs. Rice Co., 9 Minn. 258 (273); Comer v. Folsom, 13 Minn. 205 (219). Impositions in the form of taxes on auctioneers, draymen, showmen, and sellers of intoxicating liquor have never been subject to the rule of uniformity, and such impositions (though as much taxes on privileges as is the charge or impost in the name of a tax on the right of succession) are treated as without the limitations of section 1. The right of the state to control inheritances and to designate the class of persons who inherit has always been...

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