§ 28.

Derived from Taxing Power or from Power to Regulate Descent. § 29. Power of State to Regulate or Prohibit Devolution on Death. § 30. Power of Congress.

§ 31. Power of Municipalities.

Sec. 27. State Legislatures.

The legislature has implied inherent power to levy an inheritance tax although no such power is expressly granted by the constitution.

Booth v. Commonwealth, 130 Ky. 88, 113 S. W. 61. State v. Dalrymple, 70 Md. 294, 17 A. 82, 3 L. R. A. 372. State v. Switzler, 143 Mo. 287, 316, 45 S. W. 245, 40 L. R. A. 280, 65 Am. St. Rep. 653. Matter of McPherson, 104 N. Y. 306. Pullen v. Commissioners (1872), 66 N. C. 361. In re Morris, 138 N. C. 259, 50 S. E. 682. State v. Ferris, 53 Ohio St. 314, 41 N. E. 579, 30 L. R. A. 218. Eury v. State, 72 Ohio St. 448, 74 N. E. 650. Schoolfield v. Lynchburg, 78 Va. 366, 372. Magoun v. Illinois Trust & Savings Bank, 170 U. S. 283, 287. Snyder v. Bettman, 190 U. S. 249, 252.

The inheritance tax is in effect an assertion of sovereignty in the estate of deceased persons. Kochersperger v. Drake, 167 Ill. 122, 47 N. E. 321, 41 L. R. A. 446, affirmed in Magoun v. Illinois Trust, etc., 170 U. S. 283, 18 Sup. Ct. 594.

"It is not to be questioned that the power to tax is vested in the legislature; that it is unrestricted, except when it is opposed to some provision of the federal or state constitution; and that it extends 'to every trade or occupation, to every object of industry, use or enjoyment, and to every species of possession.' Nor is it to be questioned that the subject of taxation in the present case is one within legislative control, because inheritances, distributive shares, and legacies are but creatures of the law." Per Blodgett, J., in Curry v. Spencer, 61 N. H. 624, 630, 60 Am. St. Rep. 337.

It was urged that the state constitution grants to the legislature special and delegated powers, and legislative enactments to be valid must come within such grant of powers. But the court finds that the legislature in the absence of constitutional prohibition has the power to impose conditions by way of a tax upon legacies and successions. State v. Clark, 30 Wash. 439, 71 P. 20.

It is claimed that as the constitution did not expressly give a right to levy an inheritance tax the legislature had not that authority. But the court relies on Nebraska decisions to the effect that the constitution was not a grant but a restriction on legislative power and that the legislature may legislate upon any subject not prohibited by the constitution. The court concludes, following State v. Lancaster, 4 Neb. 537, that the enumeration in the constitution of certain

subjects for taxation did not preclude the legislature from imposing other taxes where there was no prohibition. State v. Vinsonhaler, 74 Neb. 675, 105 N. W. 472, 474.

"Some form of death duty has been used as a mode of taxation from ancient times. When the constitution of the United States was adopted, death duties had been in use in England, as well as elsewhere, and were an established mode of taxation known to the people, who, in the exercise of the sovereignty vested in them, enacted that fundamental law. The imposition of death duties must therefore have been included in the broad power of taxation granted to the legislature by the constitution. This is true of the constitution of our state." Appeal of Nettleton, 76 Conn. 235, 241, 56 A. 565.

The only case which questions the correctness of the doctrine that the imposition of an inheritance tax is authorized under our governmental system when not expressly forbidden by the state constitution is Nunnemacher v. State. There the court sustains the theory of an inheritance tax not on the power to prohibit succession but upon the power to reasonably regulate by tax. The court

finds that the state constitution expressly recognizes the fact that the state may have other sources of income aside from the direct tax upon property and that the section as to taxation is simply intended as a regulation covering the levying of a direct tax upon property if such a tax be necessary. Nunnemacher v. State, 129 Wis. 190, 223, 108 N. W. 627, 9 L. R. A. N. S. 121.

Sec. 28. Derived from Taxing Power or from Power to Regulate Descent.

Inheritance taxes may be based on the power to regulate descent, or on the power to tax.2 The imposition of a succession tax does not change the law of descent, but the laying of the tax merely casts upon the devolution of property a burden that was not borne before.3

1 People v. Griffith, 245 Ill. 532, 92 N. E. 313. "The right to impose such inheritance tax is based upon the power of the state in its sovereign capacity to regulate and control the transmission of property by inheritance. Although designated as a tax, it is not such a tax upon property as is contemplated by the state constitution. It is rather a contribution which the state levies for itself as a condition upon which the title to property shall pass upon the death of its owner." In re Inheritance Tax, 23 Colo. 492, 493, 48 P. 535.

An inheritance tax law "is nothing more than an exercise of the power which every state and sovereignty possesses, of regulating the manner and term upon which property real or personal within its dominion may be transmitted by last will and testament or by inheritance." Per Torrey, C. J., in Mager v. Grima, 8 How. 492, 493.

"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 his power is not destroyed by the dual character of our government, or by the fact that under our constitution the

It was

devolution of property is determined by the laws of the several states.' claimed that the authority to lay a succession tax arose solely from the power to regulate the descent of property. But the court replies that this proposition proves too much, that a denial of the right to regulate succession goes to the whole power of the government to impose a succession tax. Snyder v. Bettman, 190 U. S. 249, 252.

2 State v. Switzler, 143 Mo. 287, 315, 45 S. W. 245, 40 L. R. A. 280, 65 Am. St. Rep. 653. In re McKennan, 25 S. D. 369, 126 N. W. 611, 614, citing Knowlton v. Moore, 178 U. S. 41, 20 S. Ct. 747 (reversed 130 N. W. 33). Mager v. Grima, 9 How. 490.

The court suggests that Knowlton v. Moore, 178 U. S. 41, 20 S. Ct. 747, virtually overruled the Magoun case, 170 U. S. 283, 18 S. Ct. 594, and laid down the rule that the fact that the state has a right to control the transmission of property by devise or succession has nothing whatever to do with the power of the state to tax transmission of property. In re McKennan, 25 S. D. 369, 126 N. W. 611, 619 (reversed 130 N. W. 33). As to the nature of the tax see further, ante, s. 7 et seq.

3 In re Magnes, 32 Colo. 527, 77 P. 853.

Sec. 29. Power of State to Regulate or Prohibit Devolution on Death.

The state is commonly held to have plenary power to regulate descent, to tax it, or even to prohibit it altogether,1 as the right of succession on death is the creature of law and not a natural right. This doctrine has the best historical foundation and has been ably set forth in the following language, which has been repeatedly quoted with approval:

"The right to take property by devise or descent is the creature of the law and secured and protected by its authority. The legislature might, if it saw proper, restrict the succession to a decedent's estate, either by devise or descent to a particular class of his kindred, say to his lineal descendants and ascendants; it might impose terms and conditions upon which collateral relations may be permitted to take it; or it may tomorrow, if it pleases, absolutely repeal the statute of wills and that of descents and distributions and declare that, upon the death of a party, his property shall be applied to the payment of his debts, and the residue appropriated to public uses. Possessing this sweeping power over the whole subject, it is difficult to see upon what ground its right to appropriate a modicum of the estate, call it a tax or what you will, as the condition upon which those who take the estate shall be permitted to enjoy it, can be successfully questioned."

A more recent statement of this doctrine by our highest tribunal is as follows: "While the laws of all civilized states recognize in

every citizen the absolute right to his own earnings, and to the enjoyment of his own property, and the increase thereof, during his life, except so far as the state may require him to contribute his share for public expenses, the right to dispose of his property by will has always been considered purely a creature of statute and within legislative control. 'By the common law, as it stood in the reign of Henry II, a man's goods were to be divided into three equal parts, of which one went to his heirs or lineal descendants, another to his wife, and a third was at his own disposal; or if he died without a wife, he might then dispose of one moiety, and the other went to his children; and so, e converso, if he had no children, the wife was entitled to one moiety, and he might bequeath the other, but if he died without either wife or issue, the whole was at his own disposal.' 2 Bl. Com. 492. Prior to the statute of wills, enacted in the reign of Henry VIII, the right to a testamentary disposition of the property did not extend to real estate at all, and as to personal estate, was limited as above stated. Although these restrictions have long since been abolished in England, and never existed in this country, except in Louisiana, the right of a widow to her dower and to a share in the personal estate is ordinarily secured to her by statute. "By the Code Napoleon, gifts of property, whether by acts inter vivos or by will, must not exceed one-half the estate if the testator leave but one child; one-third if he leaves to children; one-fourth if he leaves three or more. If he have no children, but leaves ancestors, both in the paternal and maternal line, he may give away but one-half of his property, and but three-fourths if he have ancestors in but one line. By the law of Italy, one-half a testator's property must be distributed equally among all his children; the other half he may leave to his eldest son or to whomsoever he pleases. Similar restrictions upon the power of disposition by will are found in the codes of other continental countries, as well as in the state of Louisiana. Though the general consent of the most enlightened nations, has, from the earliest historical period, recognized a natural right in children to inherit the property of their parents, we know of no legal principle to prevent the legislature from taking away or limiting the right of testamentary disposition or imposing such conditions upon its exercise as it may deem conducive to public good."4

The following language is also enlightening:

"The right of inheritance including the designation of heirs and the proportions which the several heirs shall receive, as well as the

right of testamentary disposition, are entirely matters of statutory enactment, and within the control of the legislature. As it is only by virtue of the statute that the heir is entitled to receive any of his ancestor's estate, or that the ancestor can divert his estate from the heir, the same authority which confers this privilege may attach to it the condition that a portion of the estate so received shall be contributed to the state, and the portion thus to be contributed is peculiarly within the legislative discretion."5

On the other hand a few courts have laid down the proposition that while a state may regulate or alter laws of succession on death, it cannot entirely abolish the right of succession by inheritance or bequest."

The Massachusetts court has said:

"The descent or devolution of property on the death of the owner in England and in this country has always been regulated by law."

"The legislature cannot so far restrict the right to transmit property by will or by descent as to amount to an appropriation of property generally, . . . it cannot impose a tax which shall be equivalent, or almost equivalent, to the value of the property, and cannot so limit the persons who can take as heirs, devisees, distributees or legatees that the great mass of all the property of the inhabitants must become vested in the commonwealth by escheat. The state can take property by taxation only for the public service, and we assume that its right to take property, if any exists, by regulating the distribution of it on the death of the owner, is limited in the same manner, and that this right must be exercised in a reasonable way."

דיי.

The last word on the subject has been uttered by the supreme court of Wisconsin which, speaking of the prevailing doctrine, remarks that the unanimity with which the proposition is stated is only equaled by the paucity of reasoning by which it is supported, and says that the declaration of the court of North Carolina seems to have reached the logical goal toward which the other cases only tend, namely, the denial of all natural rights of property. It comes perilously near the doctrine that might makes right.

The court quotes from Mr. Justice Brown, United States v. Perkins, 163 U. S. 625, 16 Sup. Ct. 1073, where he says:

"The general consent of the most enlightened nations has from the earliest historical period recognized a natural right in children to inherit the property of their parents."