Thompson v. Kidder

• Citation: 65 A. 392,74 N.H. 89
• Parties: THOMPSON v. KIDDER et al.
• Decision Date: 04 December 1906
• Court: Supreme Court of New Hampshire

65 A. 392

74 N.H. 89

THOMPSON

v. KIDDER et al.

Supreme Court of New Hampshire. Merrimack.

Dec. 4, 1906.

Transferred from Superior Court; Pike, Judge.

Bill in equity by James Thompson, executor of the will of James Thompson, deceased, against Willis S. Kidder and another for instruction as to whether legacies given by the will to each of defendants are subject to an inheritance tax imposed by Laws 1905, p. 432, c. 40. Facts alleged in bill found to be true, and the cause transferred from the superior court Case discharged.

The defendants claim that said chapter is unconstitutional; and upon this question the plaintiff asks the instruction of the court By leave of court the Attorney General appeared for the state. Section 1, c. 40, p. 432, Laws 1905, is as follows: "All property within the jurisdiction of the state, real or personal, and any interest therein, whether belonging to inhabitants of the state or not, which shall pass by will, or by the laws regulating intestate succession, or by deed, grant, sale, or gift, made or intended to take effect in possession or enjoyment after the death of the grantor, to any person, absolutely or in trust, except to or for the use of the father, mother, husband, wife, lineal descendant, brother, sister, adopted child, the lineal descendant of any adopted child, the wife or widow of a son, or the husband of a daughter, of a decedent, or to or for the use of charitable, educational, or religious societies or institutions in this state the property of which is by law exempt from taxation, or to a city or town in this state for public purposes, shall be subject to a tax of five per cent. of its value, for the use of the state."

Edwin G. Eastman, Atty. Gen., and Joseph S. Matthews, for the State. Streeter & Hollis, opposed to tax.

PARSONS, C. J. "The public charges of government or any part thereof may be raised by taxation upon polls, estates, and other classes of property, including franchises and property when passing by will or inheritance." Const. 1903, art. 6. The main argument of the opponents of the tax is in support of the contention that any inheritance tax violates well-known constitutional principles. It is not claimed that the language of article 6, as it now stands, is not sufficient to authorize the legislation of this character; but the contention is that such action is contrary to the requirements of other provisions of the instrument, namely, article 12 of the Bill of Rights—"Every member of the community has a right to be protected by it in the enjoyment of his life, liberty, and property. He is, therefore, bound to contribute his share in the expense of such protection"—and the provision of article 5, part 2, granting "full power and authority" to the general court "to impose and levy proportional and reasonable assessments, rates, and taxes upon all the inhabitants of, and residents within, the said state, and upon all estates within the same." It is claimed that an inheritance tax is of necessity disproportional and in that sense unequal, does not provide for an equal division of public expense, and is contrary to the special provisions cited, as applied in a long line of decisions of this court. This claim has the support of the decision in Curry v. Spencer, 61 N. H. 624, 60 Am. Rep. 337, and for the purposes of the discussion will be considered sound. The contention, then, is that the Constitution as it now stands is inconsistent and self-contradictory; that a method of defraying public charges expressly authorized by one of its provisions is for Mdden by implication by others. While the Constitution as it now stands is to be considered as a whole as if enacted at one time (Drew v. Tifft, 79 Minn. 175, 81 N. W. 839, 47 L. R. A. 525, 79 Am. St. Rep. 446), to ascertain the meaning of particular expressions, it may be necessary to give attention to the circumstances under which they became parts of the instrument The whole is to be considered, and the true meaning to be drawn from the consideration of every part. Aid in ascertaining the meaning of the provisions adopted in 1783 and of those introduced in 1903 is to be found in the circumstances surrounding the adoption of each. 'Our system of taxation originated, as in all the New England states, in the condition and circumstances of the early settlers of the country, and the nature and character of the general mass of their property. * * * It consisted mainly in lands, buildings, and cattle, visible and tangible property open to observation. The amount of property and the pecuniary condition of each citizen were generally known in his neighborhood. Business transactions were limited in amount and magnitude and of a direct and simple character, with none of the complications incident to banking, trade, commerce, and manufactures of the present day. To tax visible, tangible property was substantially to tax the entire property of the community. * * * There was but little, if any, occasion, therefore, to inquire into the principles of political economy upon which a system of taxation should be founded. As all citizens were understood to enjoy the equal protection of government, in life, liberty, person, and property, and the equal benefits of its institutions, the apparently equitable rule that all should contribute proportionally to the public charges by direct tax upon polls and estates came to be considered in our provincial and early state history as the true theory of taxation." Report of Judge Sawyer, Chairman of Tax Commissioners 1876, p. 9. "The definition of taxation, given in the foundation, is taken from books with which the leading statesmen of the Revolution were familiar." State v. Express Co., 60 N. H. 219, 250. The inevitable deduction from the theory of taxation understood by the parties to the contract, recognized and adopted by the express terms of the governmental agreement, is that "the obligation of each to contribute 'his share' requires an equal division. * * * Every one's tax being his share of public expense, an unequal division of that expense is not taxation." State v. Express Co., 60 N. H. 251. Any scheme for a disproportional division of public expense is not taxation, as understood by the parties to the Compact of 1783. Winkley v. Newton, 67 N. H. 80, 81, 36 Atl. 610, 35 L. R. A. 756; Curry v. Spencer, 61 N. H. 624, 632, 60 Am. Rep. 337; Boston, etc., R. R. v. State, GO N. H. 87, 94. Taxation of the people of the state "by New Hampshire law * * * is a division among themselves of the expense of their own government of themselves—a division made by themselves through their own agents, in pursuance of their original contract" Edes v. Boardman, 58 N. H. 580, 589. The rules prescribed to be followed in making the division are not the only rules that could be provided. State v. Express Co., 60 N. H. 219, 256, 257. Though proportion is the rule, an intention to subject themselves to disproportion in all or some of the details of defraying public charges can be proved "by an express stipulation of the contract, or other competent evidence." Id. 255.

However equitable as an abstract proposition and logically correct in principle the rule of the Compact of 1783 may be, or however just it proved in practice as applied to conditions then existing, the practical operation of that rule in promoting justice and prosperity under conditions developed by the changes of 120 years in the manners, customs, habits, and possessions of a people is at least a question open to debate. The science of government was not exhausted by the writers who preceded the Revolution, nor did the principles laid down by them and adopted by the fathers conclude further thought upon the subject of taxation. It has been suggested since then that a government should impose such a tax as is "easily assessed and collected, and is at the same time most conducive, all things considered, to the public interests." McCulloch on Taxation (1844) 19. "Equality of taxation, therefore, as a maxim of politics," says Mill. means equality of sacrifice. It means apportioning the contributions of each person towards the expenses of government, so that he shall feel neither more nor less inconvenience from his share of the payment than every other person experiences from his." Mill, Pol. Econ. bk. 5, c. 2, § 2. Or, as stated by Adam Smith: "The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they, respectively, enjoy under the protection of the state." Wealth of Nations, bk. 5, c. 2, pt. 2. See Fawcett, Pol. Econ. bk. 4, c. 1; 23 Euc. Brit. (9th Ed.) 85. There is evidence that this was the equality sought by the framers of the Constitution. Judge Sawyer's Report, 9, 10, citing Act April 12, 1770, January 2, 1772, in which the object of the Legislature was declared to be "that every person may be compelled to pay in proportion to his income."' But the questions whether an annual distribution of public expense in proportion to the property of each taxpayer is the most equitable method—whether in that or some other way the public charges can be met so as to be least of a burden to the people—are questions of economics not open in a judicial forum, but properly considered and determined in a convention of the people engaged in arranging the terms of the social compact and settling the fundamentals of government.

While an inheritance tax, or death duty, has been recognized as a method of governmental support from very early times, it was practically unknown in England at the time of the Revolution, but has since that time been in use there and more recently has been adopted in many of the states. Curry v. Spencer, 61 N. H. 624, 632, 60 Am. Rep. 337; Magoun v. Bank, 170 U. S. 283, 287, 288, 18 Sup. Ct. 594, 42 L. Ed. 1037. The number of these statutes and the judicial ingenuity that...