Edwards v. Slocum, 264 U.S. 61 (1924)
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Scribd Government DocsEdwards v. Slocum, 264 U.S. 61 (1924)
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Scribd Government Docs264 U.S.
61
44 S.Ct. 293
68 L.Ed. 564
EDWARDS, Formerly Collector of lnternal Revenue,
v.
SLOCUM et al.
No. 276.
Argued Jan. 10, 1924.
Decided Feb. 18, 1924.
The Attorney General and Mr. Alfred A. Wheat, of New York City, for
petitioner.
Mr. Robert Thorne, of New York City, for respondents.
Mr. Justice HOLMES delivered the opinion of the Court.
This is a suit brought by the respondents, executors of the will of Mrs. Sage, to
recover the amount of a tax paid under protest. The tax was levied under the act
of February 24, 1919, c. 18, 401, 40 Stat. 1057, 1096 (Comp. St. Ann. Supp.
1919, 6336 3/4 b), which imposes upon 'the transfer of the net estate of every
decedent dying after the passage of this Act' taxes equal to specified
percentages of the net estate determined as provided in section 403 (section
6336 3/4 d). Mrs. Sage left an estate of $49,129,256.99. She bequeathed
specified sums amounting to $1,285,000 for charitable purposes, $8,618,079.55
for purposes other than charitable, and the residue to charitable and educational
institutions named. It is admitted that in estimating the tax now in question
there is to be deducted from the gross estate the sum of $3,789,321.74 for debts
and expenses and the charitable gifts of $1,285,000. These with the gifts to
individuals above stated would leave a residue of $35,436,855.70, which the
executors contend is exempt by the statute. Adding to the sums admitted to be
exempt the residue thus arrived at and the statutory exemption of $50,000 the
amount for which exemption is claimed will be $40,561,177.44, leaving a
taxable remainder of $8,568,079.55. The Government required the payment of
an additional sum reached by deducting from the exempted estate the amount
of the tax to be paid, or in other words, adding the amount of the tax to the
taxable estate. The suit is to recover this additional sum. The executors
prevailed in the District Court and Circuit Court of Appeals after a discussion
with which the Government well might have remained satisfied. 287 Fed. 651.
2
The Government's argument turns largely upon the consideration that a residue
is only what is left after the payment of paramount claims. But this is not a tax
upon a residue, it is a tax upon a transfer of his net estate by a decedent, a
distinction marked by the words that we have quoted from the statute, and
previously commented upon at length in Knowlton v. Moore, 178 U. S. 41, 49,
77, 20 Sup. Ct. 747, 44 L. Ed. 969. It comes into existence before and is
independent of the receipt of the property by the legatee. It taxes, as Hansen,
Death Duties, puts it in a passage cited in 178 U. S. 49, 20 Sup. Ct. 751 'not the
interest to which some person succeeds on a death, but the interest which
ceased by reason of the death.' It levies a sum equal to a certain percentage of
the value of the net estate, and provides the criteria by which the net estate shall
be ascertained. It thus manifestly assumes that the net estate will be ascertained
before the tax is computed. The Government offers an algebraic formula by
which it would solve the problems raised by two mutually dependent
indeterminates. It fairly might be answered, as said by the Circuit Court of
Appeals, that 'algebraic formulae are not lightly to be imputed to legislators' but
it appears to us that the structure of the statute is sufficient to exclude the
imputation. As further remarked below, the theory departs from the long
established practice of the law not to regard the incidence of a tax in the levying
of a tax, and the position of the Government is contrary to the expressed intent
of the statute to encourage charitable bequests. It is inconsistent with itself also
in maintaining that while the distribution of the burden of taxation among the
several beneficiaries is a matter of state regulation, the residue is not to be
diminished by the state inheritance tax but only by the estate tax of the United
States.
Judgment affirmed.
