William Snyder v. Bernard Bettman

• Decision Date: 01 June 1903
• Docket Number: No. 230,230
• Citation: 47 L.Ed. 1035,190 U.S. 249,23 S.Ct. 803
• Parties: WILLIAM L. SNYDER, Executor, Plff. in Err. , v. BERNARD BETTMAN, Collector
• Court: U.S. Supreme Court

190 U.S. 249

23 S.Ct. 803

47 L.Ed. 1035

WILLIAM L. SNYDER, Executor, Plff. in Err.,

v BERNARD BETTMAN, Collector.

No. 230.

Argued April 7, 8, 1903.

Decided June 1, 1903.

This was an action brought by the executor of David L. Snyder against the collector of internal revenue to recover $22,000, succession tax upon a legacy of $220,000 bequeathed to the city of Springfield, Ohio, in trust to expend the income in the maintenance, improvement, and beautifying of a public park of the city, known as Snyder park, including any extension thereof which said city might acquire. Such tax having been paid under protest, this action was brought to secure a refunding of the same.

A demurrer to the petition having been sustained by the circuit court, and final judgment entered, the case was brought here by writ of error.

Mr. J. E. Bowman, for plaintiff in error.

Assistant Attorney General Beck for defendant in error.

Mr. Justice Brown delivered the opinion of the court:

This case involves the single question whether it is within the power of the Federal government, and within the spirit of the act of Congress of June 13, 1898 (30 Stat. at L. 448, chap. 448 U. S. Comp. Stat. 1901, p. 2286), to impose a succession tax upon a bequest to a municipal corporation of a state for a corporate and public purpose.

The case is, to a certain extent, the converse of those of the United States v. Perkins, 163 U. S. 625, 41 L. ed. 287, 16 Sup. Ct. Rep. 1073, and Plummer v. Coler, 178 U. S. 115, 44 L. ed. 998, 20 Sup. Ct. Rep. 774. In the first of these we held it to be within the competency of the state of New York to impose a similar tax upon a bequest to the Federal government, incidentally deciding that the inheritance tax of the state was 'in reality a limitation upon the power of a testator to bequeath his property to whom he pleases, a declaration that, in the exercise of that power, he shall contribute a certain percentage to the public use;' and (2) that the tax was not a tax upon the property itself, but upon its transmission by will or descent. In Plummer v. Coler we held the incidental fact that the property bequeathed is composed in whole or in part of Federal securities did not invalidate the state tax or the law under which it was imposed, although it was accepted as undeniable that the state could not, in the exercise of the power of taxation, tax obligations of the United States, and, correlatively, that bonds issued by a state, or under its authority by its municipal bodies, were not taxable by the United States.

It is insisted, however, that the case under consideration is distinguished from those above cited, in the fact that the inheritance tax of New York was but a condition annexed to the power of a testator to dispose of his property by will, and that such power, being purely statutory, the state has the right to annex such conditions to it as it pleases. The case, then, really resolves itself into the question whether the authority to lay a succession tax arises solely from the power to regulate the descent of property, or, as well from the independent general power to tax, or, as expressed in the Constitution, art. I, § 8, 'to lay and collect taxes, duties, imposts, and excises.' The difficulty with this proposition of the plaintiff is that it proves too much. If it be true that the right to impose such taxes arises solely from the right to regulate successions, then a denial of such right goes to the whole power of the government to impose a succession tax, irrespective of the question whether the legacy is made to a private individual or to an agent of the state, and the cases in this court upholding the power of the Federal government to lay such tax were wrongly decided.

That question was exhaustively considered by this court in Knowlton v. Moore, 178 U. S. 41, 44 L. ed. 969, 20 Sup. Ct. Rep. 747, in which the constitutionality of this law was attacked upon four grounds: (1) That the taxes imposed were direct taxes, and not apportioned according to the population; (2) if not direct, they were levied on rights created solely by a state law, depending for their continued existence on the consent of the several states; (3) because they were not uniform throughout the United States; (4) that the rate of tax was determined by the aggregate amount of the personal estate of the deceased, and not by the sum of the legacies or distributive shares. It was held, following the cases of United States v. Perkins, 163 U. S. 625, 41 L. ed. 287, 16 Sup. Ct. Rep. 1073, and Magoun v. Illinois Trust & Sav. Bank, 170 U. S. 283, 42 L. ed. 1037, 18 Sup. Ct. Rep. 594, that an inheritance tax was not one upon property, but upon the succession. The question involved here, as to the power of Congress to levy a succession tax, was considered, and it was said by Mr. Justice White (p. 56, L. ed. p. 975, Sup. Ct. Rep. p. 753): 'The proposition that it cannot rests upon the assumption that, since the transmission of property by death is exclusively subject to the regulating authority of the several states, therefore the levy by Congress of a tax on inheritances or legacies in any form is beyond the power of Congress, and is an interference by the national* gov- ernment with a matter which falls alone within the reach of state legislation.' This proposition was pronounced a fallacy (p. 59, L. ed. p. 977, Sup. Ct. Rep. p. 755): 'In legal effect, then, the proposition upon which the argument rests is that wherever a right is subject to exclusive regulation, by either the government of the United States on the one hand or the several states on the other, the exercise of such rights as regulated can alone be taxed by the government having the mission to regulate.' In this connection was cited the power of the states to tax imported goods after they had been commingled with the general property of the state, as well as vehicles engaged in interstate commerce.

Continuing, it was further said (page 60, L. ed. p. 977, Sup. Ct. Rep. p. 755): 'It cannot be doubted that the argument, when reduced to its essence, demonstrates its own unsoundness, since it leads to the necessary conclusion that both the national and state governments are devested of those powers of taxation which, from the foundation of the government, admittedly have belonged to them. . . . Under our constitutional system, both the national and the state governments, moving in their respective orbits, have a common authority to tax many and diverse objects, but this does not cause the exercise of its lawful attributes by one to be a curtailment of the powers of government of the other, for if it did there would practically be an end of the dual system of government which the Constitution established.'

This case must be regarded as definitely establishing the doctrine that the power to tax inheritances does not arise solely from the power to regulate the descent of property, but from the general authority to impose taxes upon all property within the jurisdiction of the taxing power. It has usually happened that the power has been exercised by the same government which regulates the succession to the property taxed; but this power is not destroyed by the dual character of our government, or by the fact that, under our Constitution, the devolution of property is determined by the laws of the several states.

The principles laid down in Knowlton v. Moore were reiterated in Murdock v. Ward, 178 U. S. 139, 44 L. ed. 1009, 20 Sup. Ct. Rep. 775, although the case was decided upon on the authority of Plummer v. Coler.

If it be true that it is beyond the power of Congress to im- pose an inheritance tax because the descent of property is regulated by state statutes, it would be difficult to support its power to impose stamp taxes upon commercial and legal instruments, since the conveyance, regulation, and transmission of all property is governed by the laws of the several states. Particularly would this be so with reference to stamp duties imposed upon documents connected with the devolution of the property of a deceased person. And yet, as stated in Knowlton v. Moore (page 50, L. ed. p. 973, Sup. Ct. Rep. p. 751) Congress, as early as 1797, imposed a stamp duty [1 Stat. at L. 527, chap. 11], not only upon receipts or other discharges for or on account of any legacy, or for a share of personal estate divided under the statute of distributions, proportioned to the amount of the legacy or such distributive share, but, in the internal revenue act of 1862 (12 Stat. at L. 432, 483, chap. 119, U. S. Comp. Stat. 1901, p. 186), a tax was imposed upon the probate of wills and letters of administration, proportioned to the value of the estate. Not only this, but the same statute imposed a tax upon writs, or other original process, by which suits are commenced in any court of record, exempting only processes issued by justices of the peace, or in suits begun by the United States or any state. This act was treated as applicable to the state courts, although its constitutionality may well be doubted.

Referable to the same principle is the power of Congress to tax occupations which can only be carried on by permission of the state authorities and under conditions prescribed by its laws, such, for instance, as the profession of a lawyer or physician, or the business of dealing in spirituous liquors, for which licenses are required under the laws of nearly all the states. While the power of Congress to impose such taxes may never have been expressly affirmed by this court, it does not seem to have been seriously questioned, and is a legitimate inference from McGuire v. Massachusetts, 3 Wall. 387, 18 L. ed. 226; License Tax Cases, 5 Wall. 462, 18 L. ed. 497; Pervear v. Massachusetts, 5 Wall. 475, 18 L. ed. 608; and Royall v. Virginia, 116 U. S. 572, 580, 29 L. ed. 735, 737, 6 Sup. Ct. Rep. 510. See also Ould v. Richmond, 23 Gratt. 464, 14 Am. Rep. 139; Humphreys v. Norfolk, 25 Gratt. 97.

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