Knowlton v. Moore, ante, 178 U. S. 41, and
Murdock v. Ward, ante, 178 U. S. 139,
followed.
In the Circuit Court of the United States for the Northern
District of New York, on November 20, 1899, George D. Sherman filed
a complaint against the United States seeking to recover from said
defendant the sum of $8,969.02, which he claimed had been unjustly
exacted by John G. Ward, Collector of Internal Revenue for the
Fourteenth District of New York, from George T. Murdock, executor
of the last will of Mrs. Jane H. Sherman, the mother of
complainant, as a duty or tax imposed by virtue of the provision of
the Act of June 13, 1898; that said sum of $8,969.02 was deducted
by the said executor from the income due and payable under the
provisions of said will to the complainant; that the income, of
which the complainant was entitled to receive an annual portion
during his life, was composed in part of United States bonds which
the complainant avers to be, by virtue of the acts of Congress
under which they were issued, nontaxable and nonassessable for the
purposes of taxation.
Page 178 U. S. 151
The United States, appearing by Charles H. Brown, United States
Attorney for the Northern District of New York, demurred to the
complaint upon the ground that the same did not state facts
sufficient to constitute a cause of action. On hearing, the circuit
court sustained the demurrer and ordered that the complaint be
dismissed. A writ of error was allowed to this judgment, and the
cause was brought to this Court.
MR. JUSTICE SHIRAS delivered the opinion of the Court.
Insofar as the contentions urged in this action are based on the
allegation that the tax imposed on the legacies left in the will of
Mrs. Jane H. Sherman is void because it is an unapportioned direct
tax, or, if not a direct tax, but a duty or excise, the same is
void because not uniform throughout the United States, or void
because it is not competent to levy an inheritance or legacy tax
upon property passing to legatees under the laws of the State of
New York, they have been disposed of adversely to the plaintiff, in
the case of
Knowlton v. Moore, ante, 178 U. S. 41,
recently decided by this Court.
So too, the proposition that bonds of the United States and the
income therefrom are not lawfully taxable under an inheritance tax
law of the United States, because exempted by contract from such
tax, has just been decided not to be well founded, in the case of
Murdock v. Ward, ante, 178 U. S. 139.
The allegation in the complaint that
"it is not within the constitutional power of Congress to
require the payment of a larger or different amount of tax from or
imposed upon a legacy or a legatee because of the greater wealth of
the donor of such legacy than is required when the legacy is the
gift of a testator of smaller means"
need not be considered, because this Court has held in the case
of
Knowlton v. Moore that, upon a proper construction of
the Act of June 13, 1898, the
Page 178 U. S. 152
amount of the inheritance or legacy tax levied thereunder is
measured by the amount of the legacy or distributive share passing
under the laws of the state, and not by the amount of the estate of
the testator or of the deceased owner.
As, however, it appears in this record that the taxes actually
levied and paid on the legacies left by the will of Mrs. Sherman
were computed upon the mistaken assumption that the amount of the
estate of the testatrix was the measure of the tax, and not the
amount of the respective legacies, the complainant is entitled to
be repaid the excess thus imposed upon his legacy. As we have
reversed the judgment in the case of
Murdock v. Ward and
have remanded that case to the Circuit Court of the Southern
District of New York in order that the erroneous computation may be
corrected, and as thus what is coming to the plaintiff in error,
upon such correction's being made, will be recovered by Murdock as
executor and trustee under the will of Mrs. Sherman, and thereby
and in that case the plaintiff in error will be indemnified, he
needs no further proceeding in his suit in the Circuit Court for
the Northern District of New York. Lest, however, the judgment
dismissing his complaint may embarrass his right to claim indemnity
from the executor, we shall reverse this judgment, and it is so
ordered.
Reversed.
MR. JUSTICE WHITE dissents in respect to the taxability of the
bonds.
MR. JUSTICE PECKHAM took no part in the decision of the
case.
