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Argument for Plaintiff in Error.



No. 70. Argued November 27, 28, 1905.- Decided January 2, 1906.

The California inheritance tax law of 1893, as amended in 1899, which

imposed a tax on inheritances of and bequests to brothers and sisters, and not on those of daughters-in-law or sons-in-law, was assailed as repugnant to the Fourteenth Amendment, and having been sustained by the highest court of the State, a writ of error from this court was prosecuted. After the record was filed a new inheritance tax law was enacted in 1905, which amended and reënacted prior laws on the subject and also repealed the acts of 1893 and 1899 without any clause saving the right of the State in respect to charges already accrued thereunder. Plaintiff in error contended that as this court had jurisdiction on the constitutional question, it should reverse the judgment, on the ground that since the repeal of the acts of 1893 and 1899 the State has no power to enforce

any taxes levied thereunder. Held that: As the Federal question on which the writ of error is prosecuted has not

become a moot one, and the affirmance of the judgment on that question alone will not prejudice the right of plaintiffs in error to have the purely local question of whether the State still has the right to enforce the taxes levied prior to the act of 1905, determined by the state court, it is the duty of this court to consider and decide the Federal question only leaving the local question open for investigation in, and adjudication by, the

state courts. The Fourteenth Amendment does not deprive a State of the power to regu

late and burden the right to inherit, but at the most can only be held to restrain such an exercise of power as would exclude the conception of judgment and discretion and would be so obviously arbitrary and unreasonable as to be beyond the pale of governmental authority; and the statutes of California, therefore, are not unconstitutional because near relatives by affinity are preferred to collateral relatives.

The facts are stated in the opinion,

Mr. Charles H. Garroutte, with whom Mr. William N. Goodwin and Mr. Curtis H. Lindley were on the brief, for plaintiff in error:

The act involved does not purport to regulate succession of estates. Estate of Cope, 191 Pa. St. 1; Re Magnes' Estate, 77 Pac. Rep. 854; State ex rel. v. Ferris, 53 Ohio St. 1. This

Argument for Plaintiff in Error.

200 U.S.

case can be distinguished from the Magoun case, 170 U. S. 283, 303, and Billings v. Ilinois, 188 U. S. 97, one of which upheld a classification on amount of property and the other on the character of the property.

When a classification of persons inter sese is made, then all persons standing alike in the eyes of the law must be placed in the same class; and if some are omitted and thereby discriminated against, they are denied the equal protection of the law.

This is a tax act. Plummer v. Coler, 178 U. S. 115; Dos Passos on Inheritance Tax Laws, 37; Est. of IT'ilmerding, 117 California, 281; Est. of Campbell, 143 California, 627; Eyre v. Jacobs, 14 Gratt. 427; State v. Hamlin, 86 Maine, 494. As to what the classification of persons subjected to tax laws may be see Minot v. Winthrop, 162 Massachusetts, 113; Black v. State, 113 Wisconsin, 205; and as to the rule by which the constitutionality of the classification may be tested see Gulf Co. v. Ellis, 165 U. S. 150; St. Louis Railway v. Paul, 62 Am. St. Rep. 175, note. The classification must always be based on reasonable grounds. Conolly v. Sever Pipe Co., 184 U. S. 540, 563; Cotting v. Stock Yards, 183 L. S. 79; Sugar Co. v. Louisiana, 179 U. S. 89; Railroad Co. v. Matthews, 174 U. S. 76, 101; Insurance Co. v. Daggs, 172 V. S. 557; M., K. & T. Ry. v. May, 194 U. S. 267. In this case there is no reasonable

. ground for the classification which has been made and tested by the Magoun case, supra; it is unconstitutional. The legislative history of collateral tax laws shows that this law is improper and unusual. Connecticut Statutes of 1888 and see the California act revising this law. Statutes, 1905, 341.

Presumptions in favor of the validity of this legislation should not be indulged. Cases supra and Smyth v. Ames, 169 U. S. 466, 527; Yick Wo v. Hopkins, 118 U. S. 366.

While the Fourteenth Amendment as settled in Knowlton v. Moore, 178 U. S. 41, does not affect acts of Congress there is a provision of the Federal Constitution which forbids Congress from denying to citizens of the United States the

200 U.S.

Argument for Defendant in Error.

equal protection of the laws. Hibben v. Smith, 191 U. S. 310, 325.

There is no vested right in the State to the tax and it is no longer payable since the repeal of the act. Dos Passos, 423; Blackwell on Tax Titles, $ 1047; 1 Desty on Taxation, 9; Flannigan v. Sierra County, 196 U. S. 553.

Mr. U. S. Webb, Attorney General of the State of California, with whom Mr. E. B. Power, Mr. Lewis F. Byington and Mr. I. Harris were on the brief, for defendant in error:

The rule of classification adopted by the state court is correct. De Yoe v. Superior Court, 140 California, 476; Magoun v. Trust Co., 170 U. S. 283; Gulf Co. v. Ellis, 165 U. S. 150; Insurance Co. v. Daggs, 172 U. S. 557; People v. Railroad Co., 105 California, 576, 584; Ex parte Jentzsch, 112 California, 469, 474; Re Wilmerding, 117 California, 281, 286.

No right guaranteed by the Fourteenth Amendment is invaded by the act. See cases supra. The classification need not necessarily be based upon blood relationship.

For other cases upholding, as constitutional, inheritance tax laws making discriminations between relatives, see United States v. Perkins, 163 U. S. 625; State v. Dalrymple, 70 Maryland, 294; In re Meriam, 141 N. Y. 479; State v. Hamlin, 86 Maine, 495; State v. Alston, 94 Tennessee, 674; Minot v. Winthrop, 162 Massachusetts, 113; Gelsthorpe v. Furnell, 51 Pac. Rep. 267; Eyre v. Jacob, 14 Gratt. (Va.) 428; In re McPherson, 104 N. Y. 306; In re Shewrell's Estate, 125 N. Y. 397; Drake v. Kockersperger, 167 Illinois, 122; Billings v. People, 189 Illinois, 472; Scholey v. Rew, 23 Wall. 331; High v. Coyne, 93 Fed. Rep. 451, sustaining the succession taxes imposed by acts of Congress in 1866 and 1898, respectively, in which similar principles were involved.

The act of 1905, even if it repeals the act of 1893 and the amendments thereto, does not affect the right of the State to its five per cent of the estates of persons who died prior to the first of July, 1905.

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MR. JUSTICE WHITE delivered the opinion of the court.

In 1893 a law was enacted in California, imposing a charge on collateral inheritances and on bequests and devises. California Stat. 1893, p. 193. The burdens which the law imposed were not laid upon inheritances, bequests or devises in favor of the father, mother, husband, wife, children, brother or sister of a decedent, or wife or widow of a son, or the husband of a daughter of the decedent, adopted children and certain public and charitable corporations. In the year 1899 the law of 1893 was amended. The amendment caused the charge imposed by the prior act to become applicable in the case of brothers and sisters of a decedent. This resulted because the amendment omitted brothers and sisters from the enumeration made in the act of 1893 of persons to whom the act was not to apply. California Stat. 1899, p. 101.

In December, 1900, Cornelia E. Campbell died intestate in the city of San Francisco, and her estate was administered upon by the appropriate court. In December, 1901, a final decree was entered, apportioning the estate remaining, after the payment of certain specified amounts, among three brothers and a sister who are the plaintiffs in error in this court. One of the sums directed by the decree to be paid before distribution was a collateral inheritance charge of $488.70, under the act of 1893 as amended in 1899.

The brothers and sister appealed to the Supreme Court of California from that portion of the decree directing the payment of the charge just mentioned. The validity of the law imposing the burden was assailed upon various grounds of a local nature, and upon the Federal ground that the amendatory act of 1899, in so far as it purported to impose a charge on inheritances, bequests or devises to brothers and sisters, denied the equal protection of the laws, and was hence repugnant to the Fourteenth Amendment to the Constitution of the United States. The Supreme Court of California affirmed the decree. In doing so it held that the contentions of a local nature were without merit,

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and that the act of 1893 as amended by the act of 1899 was not in conflict with the Fourteenth Amendment. 143 California 623.

With the questions of a local nature decided by the state court we are not concerned, and shall therefore confine our attention to the Federal question, that is, the alleged repugnancy to the Fourteenth Amendment, imposing the burden in question on brothers and sisters.

The asserted repugnance of the statute to the Constitution of the United States, as elaborately argued at bar, rests upon the proposition that the statute denied to brothers and sisters of a decedent the equal protection of the laws, because the statute embraced an inheritance, bequest or devise in favor of a brother or sister, and did not include bequests or devises in favor of a wife or widow of a son or the husband of a daughter of the decedent.

Before coming to consider this subject we must notice a wholly independent question, which the plaintiffs in error assert renders a reversal necessary, irrespective of the merits of the contention based upon the Federal question.

In March, 1905, since the record on this writ of error was filed in this court, the State of California enacted a new inheritance tax law. California Stat. 1905, p. 341. This act differs from the act of 1893 as amended in 1899 in many particulars. It includes within the classes subjected to the burdens imposed persons not embraced in the act of 1893 as amended, and whilst it does not except from its operation persons embraced in the prior act as amended, creates as to some of such persons a different rate and carves out exemptions as to designated amounts of property, not found in the earlier act. Besides, by the act, brothers and sisters or a descendant of such brothers and sisters, and the wife or widow of a son or a husband of a daughter of a decedent, are made subject to a like charge, less, however, in rate than the one theretofore imposed upon a brother or sister. The act of 1905, as declared in its title and as manifested by its provisions, was intended to cover generally the subject of inheritance taxes, and by necessary effect operated to amend and

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