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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.

473

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.

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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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473

Argument for Pennsylvania.

porations incorporated under the laws of other States without deducting the paramount taxes exacted by those other States as a transfer inheritance tax on such shares of stock. The Matter of the Estate of Henry Miller, 184 Calif. 674.

The State of Pennsylvania has no power to levy an estate tax on the value of the whole estate without deducting the paramount estate tax exacted by the United States. In the first place, this is inconsistent with the paramount taxing power of the United States. (Discussing the opinion of the court below in this case and in Kirkpatrick's Estate, 275 Pa. 271, in contrast with Knowlton v. Moore, 178 U. S. 41.) A state statute sustainable only upon a theory inconsistent with federal supremacy is invalid per se, even if in a particular case there happens to be enough money to pay the demands of both sovereignties.

In the second place, refusal to allow the deduction conflicts with the due process clause of the Fourteenth Amendment, both because of the injustice of the measure of the tax, and because the tax is thereby extended to property withdrawn from the state jurisdiction. Jennie Smith's Estate, 29 Pa. Dist. Rep. 917; Hazard v. Bliss, 43 R. I., dissent 431; Hollis v. Treasurer and Receiver General, 242 Mass. 163; Flaherty v. Hanson, 215 U. S. 515.

The State cannot directly impose a tax upon the portion of Mr. Frick's estate which the Federal Government has expropriated. It cannot do this, whether the Federal Government took it in kind or took it in money.

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Mr. David A. Reed, with whom Messrs. Gecrge W. Woodruff, Attorney General of Pennsylvania, and Maynard Teall were on the brief, for defendant in error.

The State of domicile of a decedent may include in the measure of its transfer inheritance tax the value of all the personal property of such decedent, including tangibles

Argument for Pennsylvania.

268 U.S.

situated in other States. It is a fundamental principle that real estate descends pursuant to the law of its situs, without reference to the law of the owner's domicile, and that personal property, whether tangible or intangible, and wheresoever situate, descends pursuant to the law of the owner's domicile. The law of the domicile, therefore, may impose upon the transfer of tangible personalty such conditions by way of taxation or otherwise as it may deem expedient, provided the conditions are not forbidden by constitutional restrictions. It is mere metaphysics to argue whether the transfer is effected by virtue of the law of the situs or the law of the domicile; the fact is that tangible personal property passes according to and to no greater extent than provided by the law of the domicile. Wherever the property may be, the court administering it looks first to the law of the domicile. Bullen v. Wisconsin, 240 U. S. 625.

It is admitted that Pennsylvania may not constitutionally impose a tax upon tangible personal property situated outside the State. Union Refrigerator Transit Co. v. Kentucky, 199 U. S. 194. But the Pennsylvania tax is not imposed upon any specific property whatever. A sum of money computed upon the value of the estate, such value being determined as of the date of death, is lawfully exacted by the Commonwealth for a privilege created by statute. The tax is an excise upon the privilege of transfer. It is not upon the privilege of receiving-affirmative legislation is not needed to permit acceptance of a gift-but upon the statutory privilege of transferring or transmitting property by will or intestacy. Kirkpatrick's Estate, 275 Pa. 271; Knowlton v. Moore, 178 U. S. 41; United States v. Perkins, 163 U. S. 625; Magoun v. Illinois Trust & Savings Bank, 170 U, S. 283.

That such transfer inheritance taxes are not property taxes is necessarily implied in the conclusion that United States bonds or other clearly non-taxable securities are

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