New York Trust Co v. Eisner

• Decision Date: 16 May 1921
• Docket Number: No. 286,286
• Citation: New York Trust Co v. Eisner, 256 U.S. 345, 41 S.Ct. 506, 65 L.Ed. 963, 16 A. L. R. 660 (1921)
• Parties: NEW YORK TRUST CO. et al. v. EISNER
• Court: U.S. Supreme Court

256 U.S. 345

41 S.Ct. 506

65 L.Ed. 963

NEW YORK TRUST CO. et al.

v EISNER.

No. 286.

Argued April 25 and 26, 1921.

Decided May 16, 1921.

Mr. George Sutherland, of Washington, D. C., and H. T. Newcomb, of New York City, for plaintiff in error.

Mr. Solicitor General Frierson, for defendant in error.

Mr. John B. Gleason, of New York City, for the Comptroller of the State of New York, by special leave.

Mr. J. Weston Allen, of Boston, Mass., for the State of Massachusetts and others, by special leave.

Mr. Justice HOLMES delivered the opinion of the Court.

This is a suit brought by the executors of one Purdy to recover an estate tax levied under the Act of Congress of September 8, 1916, c. 463, Title II, § 201, 39 Stat. 756, 777 (Comp. St. § 6336 1/2 b), and paid under duress on December 14, 1917. According to the complaint Purdy died leaving a will and codicil directing that all succession, inheritance and transfer taxes should be paid out of the residuary estate, which was bequeathed to the descendants of his brother. The value of the residuary estate was $427,414.96, subject to some administration expenses. The executors had been required to pay and had paid inheritance and succession taxes to New York ($32,988.97) and other States ($4,780.91) amounting in all to $37,769.88. The gross estate as defined in section 202 of the Act of Congress (Comp. St. § 6336 1/2 c) was $769,799.39; funeral expenses and expenses of administration, except the above taxes, $61,322.08; leaving a net value for the payment of legacies, except as reduced by the taxes of the United States, of $670,707.43. The plaintiffs were compelled to pay $23,910.77 to the United States, no deduction of any part of the above mentioned $37,769.88 being allowed. They allege that the Act of Congress is unconstitutional, and also that it was misconstrued in not allowing a deduction of state inheritance and succession taxes as charges within the meaning of section 203 (section 6336 1/2 d). On demurrer the District Court dismissed the suit.

By section 201 of the Act, 'a tax * * * equal to the following percentages of the value of the net estate, to be determined as provided in section two hundred and three, is hereby imposed upon the transfer of the net estate of every decedent dying after the passage of this Act.' with percentages rising from one per centum of the amount of the net estate not in excess of $50,000 to ten per centum of the amount in excess of $5,000,000. Section 202 gives the mode of determining the value of the gross estate. Then, by section 203 it is enacted:

'That for the purpose of the tax the value of the net estate shall be determined—(a) In the case of a resident, by deducting from the value of the gross estate—(1) Such amounts for funeral expenses, administration expenses, claims against the estate, unpaid mortgages, losses incurred during the settlement of the estate arising from fires, storms, shipwreck, or other casualty, and from theft, when such losses are not compensated for by insurance or otherwise, support during the settlement of the estate of those dependent upon the decedent, and such other charges against the estate, as are allowed by the laws of the jurisdiction, whether within or without the United States, under which the estate is being administered; and (2) an exemption of $50,000.'

The tax is to be due in one year after the decedent's death. Section 204 (section 6336 1/2 e). Within thirty days after qualifying the executor is to give written notice to the collector and later to make return of the gross estate, deductions allowed, net estate and the tax payable thereon. Section 205 (section 6336 1/2 f). The executor is to pay the tax. Section 207 (section 6336 1/2 h). The tax is a lien for ten years on the gross estate except such part as is paid out for allowed charges, section 209 (section 6336 1/2j), and if not paid within sixty days after it is due is to be collected by a suit to subject the decedent's property to be sold, section 208 (section 6336 1/2 i). In case of collection from some person other than the executor, the same section provides for contribution from or marshalling of persons subject to equal or prior liability 'it being the purpose and intent of this title that so far as is practicable and unless otherwise directed by the will of the decedent the tax shall be paid out of the estate before its distribution.' These provisions are assailed by the plaintiffs in error as an unconstitutional interference with the rights of the States to regulate descent and distribution, as unequal and as a direct tax not apportioned as the Constitution requires.

The statement of the constitutional objections urged imports on its face a distinction that, if correct, evidently hitherto has escaped this Court. See United States v. Field, Feb. 28, 1921, 255 U. S. 257, 41 Sup. Ct. 256, 65 L. Ed. 617. It is admitted, as since Knowlton v. Moore, 178 U. S. 41, 20 Sup. Ct. 747, 44 L. Ed. 969, it has to be, that the United...