Argument against the lawfulness of the tax. If, upon the distribution of the estate, this plaintiff had insisted that he was entitled, as the assessor asserts, to onethird of the Elwood block in severalty, both the executors and the court would have repudiated his claim, and would have told him, as their decree in fact told him, that his right was only to receive personal securities and money to an amount to be ascertained upon an accounting. If Mrs. Scholey had died intestate, it is expressly adjudicated that her interest in the Elwood estate, except so far as it was realty at the time of Elwood's death, would have passed as assets to her administrator, instead of descending to her heirs.* And this proposition seems to us conclusive of this case, for the statute nowhere distinguishes, in laying duties upon "legacies or distributive shares of personal property," on the one hand, and upon "successions to real estate" on the other, between descents by will and by operation of law. The fact that Mrs. Scholey made a will, while it makes au important difference as to who shall receive her property, can make none whatever as to its liability to pay a tax to the United States. 5. But this plaintiff never got anything like the rights even which his testatrix had. Her interest in this block has been appraised by the assessor at $15,000. But before the residuary legatee gets anything from her estate he must satisfy special legacies amounting to $6500, and pay certaiu annual charges for an indefinite period, amounting to $4100 a year, to say nothing of debts. It does not appear that there is any residuum for the plaintiff. But if, upon his final accounting as administrator, it shall turn out that there is a residue-which may well be less than the amount upon which he has paid "succession duty"-with what propriety is his share to be called real estate and charged with this tax, any more than the shares of the other distributees? 6. If it should be argued that he had, before distribution * Rogers v. Patterson, 4 Paige, 409; Gibson v. Scudamore, 1 Dickens, 45; Witter v. Witter, 3 Peere Williams, 99; Earl of Winchelsea v. Norcliffe, 1 Vernon, 435; Awdley v. Awdley, 2 Id. 192. Argument in favor of the lawfulness of the tax. of the Elwood estate, some title "in expectancy" to the block or some part of it, it was not until he should become entitled "in possession" that the duty was to be paid. That certainly had not happened when this tax was levied and collected.* 7. So far as cases at all analogous appear in the books, the authorities seem to support our position.t III. The plaintiff is an alien. If Mrs. Scholey's alleged interest in the Elwood block was an "interest in real estate," the alleged devise of it to him was absolutely void by statute of New York. The statute enacts: "SECTION 4. Every devise of any interest in real property, to a person who, at the time of the death of the testator, shall be an alien, not authorized by statute to hold real estate, shall be void. The interest so devised shall descend to the heirs of the testator; if there be no such heirs competent to take, it shall pass under his will to the residuary devisees therein named, if any there be, competent to take such interest." If, under the laws of New York, Scholey got no "interest in real estate," he cannot be made to pay tax upou an interest. It is no answer to say: this is an interest in real estate; the plaintiff has in fact got it; therefore he ought to pay duty on it. For if both premises were true the syllogism is not complete. It is further necessary, in order that the duty should attach, that he should have taken it "by will, deed, or laws of descent." There is no pretence of a deed. The will, so far as this is concerned, is void. Instead of taking by the law, he takes in spite of the law. Mr. C. H. Hill, Assistant Attorney-General, contra, for the collector, defendant in error: I. The succession tax is not a "direct tax" within the Blake v. McCartney, 10 Internal Revenue Record, 131. † Attorney-General v. Holford, 1 Price, 426; Custance v. Bradshaw, 4 Hare, 815; United States v. Watts, 1 Bond, 578. Revised Statutes of New York, part 2, chapter 6, title 1, article 1. Argument in favor of the lawfulness of the tax. meaning of that term in the Constitution, and is constitutional and valid. The construction always given to Article 1, indicates that the only taxes which the Constitution regards as direct taxes, are capitation taxes and taxes imposed immediately on land, and which are capable of apportionment without producing any inequality or injustice.* The term seems to have been derived from the Roman law, which recognized two kinds of direct taxes; a capitation tax (capitis tributum) and a land tax (agri tributum). Italy and privileged towns, which were exempted from these taxes, paid a tax of five per cent. on all testamentary successions (vicesima hereditatum), and on manumitted slaves, which together with customs and excises, seems to have been first imposed in the time of Augustus.† If all taxes that political economists regard as direct taxes should be held to fall within those words in the Constitution, Congress would be deprived of the practical power to impose such taxes, and the taxing power would be thus greatly crippled; for no Congress would dare to apportiou, for instance, the income tax. Hamilton, whose brief is preserved to us in his works published by Congress, said in arguing Hylton v. United States:§ "It would be contrary to reason and every rule of sound construction, to adopt a principle for regulating the exercise of a clear constitutional power which would defeat the exercise of the power." A succession tax is not a direct tax to any greater extent than the income tax, which was held by Mr. Justice Strong,|| in the Third Circuit, to be constitutional and valid. * Hylton v. United States, 3 Dallas, 171; Pacific Insurance Company v. Soule, 7 Wallace, 433, 446; Veazie Bank v. Fenno, 8 Id. 533, 546; 7 Hamilton's Works, 845; 1 Kent's Commentaries, 254*-256*; 1 Story on the Constitution, 954, et seq. + Poste's Gaius, 145, 146; Gibbon's Decline and Fall of the Roman Empire, ch. 6. 7 Hamilton's Works, 845. 3 Dallas, 171. Clark v. Sickel, 14 Internal Revenue Record, 6. Argument in favor of the lawfulness of the tax. It is assessed upon the landowner "in respect of" the property. Making it a lien upon the land is only a method of securing the tax, and does not make the tax a direct tax on land. The distinction is illustrated by the rule of law that a covenant in a lease to pay taxes assessed on the demised land, does not cover a tax imposed on the landlord in respect of the land.* II. Under his wife's will, Scholey took an equitable interest in one-third of the estate in question, and he is liable to pay a succession tax in respect thereof, under section 127 of the act of June 30th, 1864.† He became entitled to the income of one-third of the Elwood block, upon the death of his testatrix, that is to say, of his wife, who had herself invested the personal property left by her first husband in this estate; and he consequently became liable to pay a succession tax in respect of the same. If the Supreme Court had jurisdiction to authorize the investment of the personal estate of Elwood, in the purchase of real estate by his executors, its decree in the premises was in the nature of a proceeding in rem, and bound all persons interested therein; and there is nothing in the record to show that its jurisdiction was not complete. But there is no question here as to whether equity would treat the Elwood block as real or personal property. The property of Mrs. Elwood devised under her first husband's will had been converted by her own act into real property before she devised the same to her second husband, and this brings the case within the language of the statute. If Scholey thus acquired an interest in the Elwood block, the subsequent partition, whereby this entire estate was set off to the heirs of Elwood, does not relieve him from liability * 2 Platt on Leases, 172, and cases cited; Palmer v. Power, 4 Irish Common Law, 191; Tids well v. Whitworth, Law Reports, 2 Common Pleas, 326; Twycross v. Railroad, 10 Gray, 293; see also Society for Savings v. Coite, 6 Wallace, 594; Provident Institution v. Massachusetts, Id. 611. 13 Stat. at Large, 287, 288. Comstock v. Crawford, 3 Wallace, 396; Blount v. Darrach, 4 Washington Circuit Court, 657; Forsythe v. Ballance, 6 McLean, 562; Merriam v. White, 8 Gray, 316; Denny v. Mattoon, 2 Allen, 374–376. Opinion of the court. to pay a succession tax in respect of his share of it. He received its full value in other property. The objection that Scholey being an alien, cannot take real estate by devise under the laws of New York, but that such pretended devise is made by them absolutely void, does not seem to have been taken below; but if open to be taken here, is of no avail, for two reasons: 1st. There is nothing to show that Scholey has not been authorized to hold real estate in the manner provided for in the statute cited by him. Indeed, as he received the benefit of the devise, the presumption would be that he had been so authorized. 2d. He having never disclaimed any interest in the devise, and having received its value in the partition of the Elwood estate, from those to whom it would descend if the devise to him is void, is estopped to set up alienage in order to avoid the payment of the succession tax due on the estate. Having received the benefit of the devise, he must bear any burden attaching to it; and the government being entitled to a tax from some one in respect of this estate, may take advantage of the estoppel, being precluded by Scholey's action from claiming a tax from the heirs at law.* Mr. Justice CLIFFORD delivered the opinion of the court. Questions of importance were discussed at the bar, some of which it cannot be admitted are properly presented for decision. Such questions only as are specified in the assignment of errors are, in general, to be regarded as open to the plaintiff, and it is very doubtful whether an assignment that the decision of the Circuit Court is for the wrong party is sufficient to present any question for decision, but inasmuch as the findings of the court in this case are in their nature a special finding, the better opinion is that their sufficiency to support the judgment is open to re-examination. Flanigan v. Turner, 1 Black, 491; Swain v. Sexmens, 9 Wallace, 273, 274; Pendleton County v. Amy, 13 Id. 297, 305; Pickard v. Sears, 6 Adolphus & Ellis, 469; Welland Canal v. Hathaway, 8 Wendell, 483; Dezell v. Odell, 3 Hill, 215, 221, et seq.; Coke Littleton, 352a, 352b; Bigelow on Estoppel, 578, et seq., and cases cited. |