State v. Heinemann (In re Heinemann's Will)

• Decision Date: 29 April 1930
• Citation: 201 Wis. 484,230 N.W. 698
• Parties: IN RE HEINEMANN'S WILL. STATE ET AL. v. HEINEMANN. IN RE DESSERT'S WILL. STATE ET AL. v. DESSERT. IN RE MCMILLAN'S WILL. STATE ET AL. v. BEEBE ET AL.
• Court: Wisconsin Supreme Court

201 Wis. 484

230 N.W. 698

IN RE HEINEMANN'S WILL. STATE ET AL.

v.HEINEMANN.

IN RE DESSERT'S WILL. STATE ET AL.

v.DESSERT.

IN RE MCMILLAN'S WILL. STATE ET AL.

v.BEEBE ET AL.

Supreme Court of Wisconsin.

April 29, 1930.

Appeals from judgments of the County Court of Marathon County; George J. Leicht, Judge.

Petitions filed under the provisions of section 72.26 of the Statutes for refund of inheritance taxes unlawfully collected under the provisions of section 72.01. From judgments granting such refunds, the state of Wisconsin and Marathon county bring these appeals.John W. Reynolds, Atty. Gen., George D. Spohn, Inheritance Tax Counsel, of Madison, G. J. Boileau, and Brayton E. Smith, both of Wausau, and O. A. Oestreich, Special Counsel, of Janesville, for appellants.

Brown, Pradt & Genrich, of Wausau (Malcolm K. Whyte, of Milwaukee, of counsel), for respondent Heinemann.

Stone & Park, of Wausau (C. B. Bird, of Wausau, of counsel), for respondent Dessert.

Bird, Smith, Okoneski & Puchner, of Wausau, for respondents Beebe and Hambright.

OWEN, J.

Upon these appeals the appellants challenge the constitutionality of section 72.26, Stats., 1929, which provides for the refund by the state of inheritance taxes collected under the provisions of section 72.01, which was held unconstitutionalby the Supreme Court of the United States in the case of Schlesinger v. Wisconsin, 270 U. S. 230, 46 S. Ct. 260, 70 L. Ed. 557, 43 A. L. R. 1224. The scope and extent of the statute, so far as material, will appear as we proceed.

[1] The statute was passed in recognition of the moral obligation of the state to return moneys collected under a void taxation law. That the appropriation of money by the state for the purpose of discharging its moral obligations constitutes an appropriation for a public purpose, and is within legislative power, is neither challenged nor discussed in the briefs, and this very appropriately, as there is no judicial dissent from that proposition. It is, however, suggested in the briefs for the state that, in view of the remedies available to the taxpayer (Beck v. State, 196 Wis. 242, 219 N. W. 197) by which the validity of the law could have been ascertained, the payment of the tax was a voluntary payment from which there arose no moral obligation on the part of the state to repay the tax.

It is true that any taxpayer could have had the judgment of the Supreme Court of the United States upon the validity of this law, just as was accomplished in the Schlesinger Case, in which event payment of the tax could have been obviated. However, we do not think it follows as a matter of law that there is no moral obligation on the part of the state to repay the tax to a taxpayer who has acquiesced in the validity of the statutes of the state and discharged his duties of citizenship by the payment of such taxes as the statutes imposed upon him. The statutes of the state constituted a legislative exaction of the tax, and the decision of this court in Estate of Ebeling, 169 Wis. 432, 172 N. W. 734, 4 A. L. R. 1519, declared the exaction to be constitutional. Under these circumstances it was within the province of the Legislature to recognize a moral obligation on the part of the state to repay the tax. If authority for this proposition be required, it may be found in Jackson Hill Coal Co. v. Board of Commissioners of the County of Sullivan, 181 Ind. 335, 104 N. E. 497, where a state statute ordered a refund to any one who established that at any time he had paid taxes which were unlawfully assessed against him.

[2] Certain objections are made to the law on the ground that it violates sundry constitutional provisions with reference to the assessment and collection of taxes. We dispose of these objections to the law upon the ground that this is not a law for either the assessment or collection of taxes. It simply appropriates money from the public treasury for the payment of the obligations of the state. Constitutional limitations with reference to the assessment and collection of taxes do not obtain with reference to the appropriations of money out of the state treasury. The difference between these limitations is pointed out in the independent opinion by Mr. Justice Dodge in State ex rel. City of New Richmond v. Davidson, 114 Wis. 563, 88 N. W. 596, 90 N. W. 1067, 58 L. R. A. 739. In State ex rel. Van Dyke v. Cary, 181 Wis. 564, 191 N. W. 546, 549, it was said: “That there is a substantial distinction between an inequality in the assessing or collecting of a tax and inequality in the disbursing of its proceeds among those who contributed, and that, while the former may invalidate the tax, the latter does not, is established doctrine in this state”--citing many cases.

[3] The law is further challenged on the ground that it invades the judicial power of the state, in violation of section 2, article 7, state Constitution, vesting in the courts the judicial power of the state. This argument proceeds upon the fact that, initially, the inheritance tax is determined by the county court, and that an appeal lies from that determination to this court.

Section 72.26, Stats., providing for the refund, authorizes persons entitled to a refund under the provisions thereof to file with the county court, in which the tax was ascertained and adjudicated, a verified petition setting forth the facts required by the law, whereupon it becomes the duty of the court, upon notice, to determine the amount of void taxes included within the determination or adjudication of the inheritance taxes originally assessed and paid, and to enter an order specifying the amount of refund to which the petitioner may be entitled. It is said that this amounts to a legislative vacation or modification of a judgment of a court, which is beyond the legislative power. This would probably be true if the judgment was one to which the state was not a party. However, the state is the beneficiary of these judgments, and, when it appears that the judgment has awarded to the state more than the state is entitled to, no reason is perceived why the state may not refund the amount to which it never was entitled.

Before a refund can be made, it is necessary to determine the amount of the unlawful tax collected. The duty of making this determination is imposed on the county court. The county court does not disturb the original adjudication. That stands. The state merely pays back the amount of the unlawful tax which the original determination awarded to the state. That this is within the legislative power is expressly decided in Calkins v. State, 21 Wis. page 501.

[4][5] It is further contended that the law offends against section 2, article 8, state Constitution, which provides that “no appropriation shall be made for the payment of any claim against the state except claims of the United States and judgments, unless filed within six years after the claim accrued.” It is claimed that this provision of the Constitutionprevents the payment of any claim of this nature, unless it is filed within six years after the tax was paid. This contention depends upon the meaning of the phrase “claim against the state.” It is contended on the part of the respondents that this expression has reference to a legal claim against the state, and that it does not impose any limitation on the Legislature to recognize and pay obligations against the state of a moral nature resting upon considerations of equity and justice. We unhesitatingly adopt this construction of the phrase. The word “claim” always has had a well-understood meaning in the law. So far as our investigation has gone, it has uniformly been held to mean a legal claim, a demand as of right, and it has generally been held that such claims are further limited to those arising out of contract, where the relation of debtor and creditor exists. Houston v. State, 98 Wis. 481, 74 N. W. 111, 42 L. R. A. 39;Stephenson v. Schelk, 173 Wis. 251, 256, 180 N. W. 842; 11 Corpus Jur. 816. And see, also, many cases collated under the title “Claim” in Words and Phrases, First, Second, and Third Series.

This provision of the Constitution was no doubt intended as a limitation upon those who possessed legal claims against the state, but who permitted them to slumber without taking any action to enforce collection. It was a penalty visited upon the slothful creditor. The vigilance of one whose claim rests upon moral considerations alone can avail him nothing. He does not have an enforceable claim. He must wait until the state voluntarily recognizes the claim before he can realize thereon. It was not the purpose of the constitutional provision to permit the state to profit by its own procrastination, or to permit preceding Legislatures to tie the hands of future Legislatures by failing to recognize such claims.

[6] It is further contended that the statute denies the equal protection...