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Statement of the Case.

268 U.S.

ancillary letters were granted, the property administered and transfer taxes imposed and collected. P. 496.

4. A State, being without power to tax directly the transfer of tangible personal property in another State, can not accomplish the same thing indirectly by taking the whole of the decendent's estate, including that foreign property, as the basis for measuring the tax on the transfer of that part of the estate which lies within its jurisdiction. Maxwell v. Bugbee, 250 U. S. 525, and Plummer v. Coler, 178 U. S. 115, distinguished. P. 494.

5. The State which created a corporation has power to tax the transfer of its stock on death of a stockholder, and to enforce the tax by means practically making the State a lienor in possession, irrespective of the decedent's domicil and the actual situs of the stock certificates. P. 497.

6. This power being superior to the jurisdiction over the stock of another State in which the decedent stockholder resided, the tax imposed by the State of the corporation must be paid before the stock can be brought into administration in the State of his domicil; and a statute of the domiciliary State (Penna. Ls. 1919, 521, supra,) which does not allow the value paid out of his estate for this purpose to be deducted in computing the domiciliary transfer tax, in effect taxes what is not within the State's jurisdiction and violates the due process clause of the Fourteenth Amendment. Id.

7. The federal "estate" tax and the Pennsylvania "transfer" tax both are imposed as excises on the transfer of property from a decedent, and both take effect at the instant of transfer, so that neither has priority in time over the other. P. 498.

8. The taxing power of federal and state governments is generally so far concurrent as to render it admissible for both to tax the same subject at the same time. P. 499.

9. Neither the United States nor the State in determining the amounts of its transfer tax is under any constitutional obligation to make any deduction on account of the tax of the other. Whether, if the estate were insufficient to pay both, the United States should be preferred, is not here involved. P. 500.

277 Pa. 242, reversed.

ERROR to judgments of the Supreme Court of Pennsylvania sustaining taxes assessed under the State transfer tax law. Petitions for writs of certiorari in these cases are denied.


Argument for Plaintiffs in Error.

Messrs. George Wharton Pepper and George B. Gordon for plaintiffs in error.

The Supreme Court of Pennsylvania having construed the statute as an exercise of the State's taxing power, it must stand or fall as such; it cannot be saved by an attempt to treat it as an escheat act. Cope's Estate, 191 Pa., 1.

In measuring the tax on the right of transmission, Pennsylvania had no right to include in the clear value of the estate tangible articles of personal property which had an actual and readily ascertainable situs in New York and Massachusetts.

When analyzed, a tax on property is seen to be a tax on the thing called ownership, which is merely a person's legally protected interest in the thing owned. A tax on transmission is a tax on the substitution of one person for another in respect of the relation between the person and the thing. While the distinction is entirely thinkable, there is no really sound or substantial reason for reaching in the one case a result different from that reached in the other.

Both before and after the decision in the Union Transit Case, 199 U. S. 194, are many decisions of this Court in which decisive emphasis was laid upon the distinction between tangible and intangible property, and where the nature of the tax as being a tax on property or merely a tax measured by the value of property was immaterial. Discussing Pullman's Palace Car Co. v. Penna., 141 U. S. 18; Delaware Lackawanna etc. R. R. v. Penna., 198 U. S. 341; Weaver's Estate v. State, 110 Iowa 328; New York Central v. Miller, 202 U. S. 584; Southern Pacific v. Kentucky, 222 U. S. 63; Fidelity and Columbia Trust Co. v. Louisville, 245 U. S., 54; Bullen v. Wisconsin, 240 U. S., 625; Wallace v. Hines, 253 U. S., 66.

In all these cases, except the Pullman Case and Wallace v. Hines, the act under review was passed by the State of

Argument for Plaintiffs in Error.

268 U.S.

the domicile and was either a tax on the ownership of property or a tax on the use or transmission of property. In every case in which the property was intangible personalty the tax was upheld. In every case in which tangible personalty with a situs outside the domiciliary State was either sought to be taxed or to be included in the measure of the tax, the tax was adjudged invalid. The Pullman Car Case and the case of New York Central v. Miller, 202 U. S. 594, are not exceptions.

The limited power of each of the States to reach by taxation tangible personalty physically beyond its boundaries is in marked contrast with the plenary power of the United States to use its jurisdiction over its domiciled citizens as a basis for taxing their tangible personalty wherever it may be. United States v. Bennett, 232 U. S. 299.

Blackstone v. Miller, 188 U. S. 189; Wheeler v. New York, 233 U. S. 434; and Maxwell v. Bugbee, 250 U. S. 525 discussed and explained as consistent with the principles contended for.

In many of these cases there is more or less reference to one of the basic principles of taxation, which is that the citizen enjoys a protection of person and property, which is a reciprocal of the power of the sovereign to tax him. It is of course not possible to test the validity of a tax act by a specific relation between the amount or nature of the tax and the degree of protection afforded. Where a right which is the subject of tax cannot possibly have been conferred by the taxing State, but exists because of the act of another sovereignty, it may not lawfully be included in the tax. Louisville Ferry Co. v. Kentucky, 188 U. S. 385. Cf, Baltic Mining Co. v. Massachusetts, 231 U. S. 68, Looney v. Crane Co., 245 U. S. 178.

The right to impose a transfer tax upon personal property must necessarily be based upon the same jurisdictional fact as the taxation of the transfer of real estate.


Argument for Plaintiffs in Error.

We submit that it is the law that, while the transfer of intangible personalty can be taxed at the domicile of the owner, either inter vivos or upon death, that is true only because of the fiction mobilia sequuntur personam. Originally this theory applied to tangibles as well as to intangibles, but it has long since passed away as to anything except intangibles. This, because fiction, must yield to fact. These tangible articles, pictures, furniture, household stores, cows, horses, agricultural implements, have a real, physical existence and necessarily have a situs as surely as buildings and lands have. Their situs is in New York and Massachusetts, not in Pennsylvania. Therefore, this tax cannot be sustained upon authority of the maxim mobilia sequuntur personam, either under the decisions of this Court or under the decisions of the Supreme Court of Pennsylvania: Eidman v. Martinez, 184 U. S. 578; Union Refrigerator Transit Co. v. Kentucky, 199 U. S. 194; Metropolitan Life Insurance Co. v. New Orleans, 205 U. S. 395; Commonwealth v. Delaware, Lackawanna etc. R. R., 145 Pa. 96; Commonwealth v. American Dredging Co., 122 Pa. 386; Hostetter's Estate, 267 Pa. 193.

It is argued that, since there was property in Pennsylvania which did pass and which was undoubtedly subject to its jurisdiction, the State could impose such conditions as it pleased upon the transfer of that property; that when the residuary legatees came into Pennsylvania to get their share in the residuary estate, the State could say to them: "You shall take only what we see fit to allow you to take, and what you can take is only that which is left after we have deducted an ad valorem tax upon the value of all the property, adding to the value of the property within our jurisdiction the value of all real estate and all tangible personal assets located without our jurisdiction.”

We submit that the levying of a capital tax, an ad valorem tax, a transfer tax, based upon any such theory

Argument for Plaintiffs in Error.

268 U.S.

and actually producing such a result, is unjust, is confiscatory, is a violation of due process of law. The establishment of such a proposition would mean the overturning of the whole theory of taxation. At the decedent's death these tangible articles of personal property passed by virtue of the laws of Massachusetts and New York, not of Pennsylvania. Harvey v. Richards, 1 Mason, 381; Blackstone v. Miller, 188 U. S. 189; In re Lorillard Griffiths v. Catforth, 1922, 2 Ch., 638. It is a question for the common law of New York and Massachusetts how far they will recognize the laws of Pennsylvania as to the validity of a Pennsylvania will and of the succession to property located in New York and Massachusetts, and in so far as they do recognize it, they do so because such is the common law of New York and Massachusetts, not because it is the law of Pennsylvania. A State can not say that the tangibles which are in the State and within its taxing powers may be valued, for tax purposes, not at their actual value, but at the value of all decedent's estate everywhere. The legislature of Pennsylvania manifestly never intended to do so, but in plain language attempted to tax the transfer of property outside of the State. But be this as it may, we submit with confidence that no court in Christendom ever sustained any such proposition. It is not due process of law. Knowlton v. Moore, 178 U. S. 41, 76; Maxwell v. Bugbee, 250 U. S. 525, 529.

Upon the precise point there is no case decided by this Court or any other federal court. There is dictum in Keeney v. New York, 222 U. S. 525, 537. The decisions of the state courts are conflicting. Weaver's Estate, 110 Iowa, 328; State v. Brevard, 62 N. C. 141; Joyslin's Estate, 76 Vermont, 88; Matter of Estate of Swift, 137 N. Y., 77. Distinguishing: Carpenter v. Pennsylvania, 17 How. 456; Hartman's Estate, 70 N. J. Eq. 664; State v. Spokane & Eastern Trust Co. (Wash.), 211 Pac. 734.

The State of Pennsylvania has no power to levy an estate tax on the value of shares of capital stock of cor

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