Ferry v. Campbell

• Decision Date: 22 January 1900
• Citation: 81 N.W. 604,110 Iowa 290
• Parties: FERRY ET AL. v. CAMPBELL ET AL.
• Court: Iowa Supreme Court

110 Iowa 290

81 N.W. 604

FERRY ET AL.

v.CAMPBELL ET AL.

Supreme Court of Iowa.

Jan. 22, 1900.

Appeal from district court, Pottawattamie county; A. B. Thornell, Judge.

Suit in equity to enjoin defendants from collecting an inheritance tax upon the property of the estate of Frank C. Stewart on the ground that chapter 28 of the Acts of the 26th General Assembly, and the re-enactment thereof in the Code of 1897, are in contravention of the fourteenth amendment to the constitution of the United States and of section 9, art. 1, of the constitution of this state. Defendants demurred to the petition, but their demurrer was overruled, and decree was entered for plaintiffs as prayed. Defendants appeal. Reversed.Milton Remley, Atty. Gen., and C. G. Saunders, for appellants.

Frank Shinn and Stone & Finley, for appellees.

DEEMER, J.

The first section of the act in question reads as follows: “All property within the jurisdiction of this state, and any interest therein, whether belonging to the inhabitants of this state or not, and whether tangible or intangible, which shall pass by will or by the statutes of inheritance of this or any other state, or by deed, grant, sale or gift, made or intended to take effect in possession or in enjoyment after the death of the grantor or donor, to any person in trust or otherwise, other than to or for the use of the father, mother, husband, wife, lineal descendant, adopted child, the lineal descendant of an adopted child of a decedent, or to or for charitable, educational or religious societies or institutions within this state, shall be subject to a tax of five per centum of its value, above the sum of one thousand dollars, after the payment of all debts, for the use of the state; and all administrators, executors, and trustees, and any such grantee under a conveyance, and any such donee under a gift, made during the grantor's or donor's life, shall be respectively liable for all such taxes to be paid by them, respectively, except as herein otherwise provided, with lawful interest, as hereinafter set forth, until the same shall have been paid. The tax aforesaid shall be and remain a lien on such estate from the death of the decedent until paid.” Acts 26th Gen. Assem. c. 28. This is followed by provisions requiring the executor to make and file a separate inventory of the real estate subject to the tax, an appraisement of said real estate by appraisers approved by the clerk, the filing of the appraisement, and the manner of estimating the tax to be paid on the property. Section 3 of that act provides, in substance, that the real estate of the deceased subject to the tax shall be appraised within 30 days next after the appointment of the executor, and that the tax thereon, calculated on the appraised value, shall be paid within 15 months after the approval of the appraisement. The appraisement made of the personal property by the regularly appointed appraisers seems to be made the basis for levy of the tax on that kind of property. No notice to the heirs, legatees, or devisees is provided for or required. For this reason it is said that the act is unconstitutional, because it results in a deprivation of property without due process of law. What is due process of law within the meaning of federal and state constitutions is not clearly defined. As said by Justice Miller in Davidson v. Board, 96 U. S. 97, 24 L. Ed. 616: “If, therefore, it were possible to define what it is for a state to deprive a person of life, liberty, or property without due process of law in terms which would cover every exercise of power thus forbidden to the state and exclude those which are not, no more useful construction could be furnished by this or any other court to any part of the fundamental law. But, apart from the imminent risk of a failure to give any definition which would be at once perspicuous, comprehensive, and satisfactory, there is wisdom, we think, in the ascertaining of the intent and application of such an important phrase in the federal constitution by the gradual process of judicial inclusion and exclusion, as the cases presented for decision shall require, with the reasoning on which such decisions may be founded.” Mr. Webster's definition in the Dartmouth College Case has been more generally followed than any other. Among other things, he said: “It was a law which hears before it condemns; which proceeds upon inquiry, and renders judgment only after trial. The meaning is that every citizen shall hold his life, liberty, property, and immunities under the protection of the general rules which govern society. Everything which may pass under the form of an enactment is not, therefore, to be considered the law of the land.” As a general rule, confiscation of property without a judicial hearing after due notice is not due process of law. There are, of course, exceptions,--as, for instance, where it becomes necessary to destroy private property to prevent the spread of fire or pestilence in a city, or the advance of an army,--but these exceptions are due to overruling necessity. In Gatch v. City of Des Moines, 63 Iowa, 718, 18 N. W. 310, these questions were very fully considered, and it was there held that the legislature could no more impose an assessment for which property may be taken and sold than it can render a judgment against a person without hearing; that notice of proceedings in such cases, and an opportunity for a hearing of some description were matters of constitutional right, and that a special assessment for the cost of improving streets could not lawfully be imposed upon abutting property without notice to the owner, and an opportunity to be heard in opposition thereto. In that case certain exceptions were noted as follows: “It is true that there are some species of property to which the rule is not applicable. They may embrace a poll tax, a license tax, a tax upon occupations, and the like, where the tax is specific, and operates upon all alike. Taxes of these and like kinds are plainly exceptions to the rule, because a hearing would be of no possible avail. In such cases the law fixes the amount, and there is nothing left to inquire into and determine.” The attorney general frankly concedes that, if the tax in question is a property tax, the demurrer was properly sustained, because of the fact that neither the statute nor the rules of court at that time provided for notice. But he insists that the tax is upon the right of succession; is a succession tax; in fact, that the state has the right to impose such taxes as a condition upon the privilege of inheritance, and that no notice of the appraisement is required. Such taxes as are imposed by the act under consideration have been almost universally denominated succession taxes, and they have been upheld on the theory that the right to succeed to property upon the death of the owner is the creation of law, and that the state, which creates this right, may regulate it; that is, it may say how and to what extent the succession may go, may impose conditions and burdens thereon, and may, to a certain extent, fix the situs of property for the purpose of taxation. See Clymer v. Com., 52 Pa. St. 187; Strode v. Com., Id. 181; In re Swift, 137 N. Y. 77, 32 N. E. 1096, 18 L. R. A. 709;Miller's Ex'r v. Com., 27 Grat. 117;Magoun v. Bank, 18 Sup. Ct. 594, 42 L. Ed. 1037. The history of such taxes is a most interesting study, but is entirely too long to be considered in this opinion. See, as bearing on the question, State v. Alston (Tenn. Sup.) 30 S. W. 750, 28 L. R. A. 178; Dowell, Hist. Tax'n Eng. 148; Review of Reviews, Feb., 1893. Wills, and therefore testaments, and rights of inheritance and succession, are, as Blackstone says, “all of them creatures of the civil or municipal law, and accordingly are in all respects regulated by them.” This is fundamental doctrine, and it is no doubt true that there is nothing in our fundamental law to prevent the legislature from taking away or limiting the right of testamentary disposition or of inheritance, or imposing such condition on its exercise as it may deem best for the public good. See U. S. v. Perkins, 163 U. S. 625, 16 Sup. Ct. 1073, 41 L. Ed. 287;U. S. v. Fox, 94 U. S. 315, 24 L. Ed. 192;Mager v. Grima, 8 How. 490, 12 L. Ed. 1168;Eyre v. Jacob, 14 Grat. 427.

These well-settled propositions do not, as we view it, settle the question raised by the demurrer. The statute says that “all the property within the jurisdiction of the state which shall pass by will or by the statutes of inheritance of this or any other state * * * shall be subject to a tax of five per centum of its value * * * for the use of the state, * * * and all administrators, executors,” etc., “shall be liable for all such taxes to be paid by them, * * * and the tax aforesaid shall be and remain a lien on such estate from the death of the decedent until paid.” Section 3 of the act provides that all real estate subject to the tax shall be appraised within 30 days after the appointment of the executor, and the tax calculated thereon upon the appraised value shall be paid by the person entitled to said estate, and in default thereof the court shall order the same, or so much thereof as may be necessary to pay the tax, to be sold. It will thus be seen that the right of testamentary disposition or of inheritance as it had theretofore existed is recognized by this statute. The property passes to the heir, devisee, or legatee just as it did prior to the enactment of this law; but a lien is imposed upon it under certain conditions, in virtue of the right of the state to tax successions, and the amount of the lien or tax is to be determined by an appraisement of the property. If the statute provided that thereafter certain persons should not...