The fact that, as construed by the highest court of that state,
the exemptions in the inheritance tax law of Illinois of religious
and educational institutions do not apply to corporations of other
states does not render the provisions of the law applicable to
foreign religious and educational institutions void as
discriminatory and counter to the equal protection clause of the
Fourteenth Amendment.
It is not an unreasonable or arbitrary classification for a
state to exempt from inheritance taxes only such property
bequeathed for charity or educational purposes as shall be bestowed
within its borders or exercised by persons or corporations under
its control,
The facts are stated in the opinion.
Page 203 U. S. 558
MR. JUSTICE McKENNA delivered the opinion of the Court.
This writ of error is directed to a judgment of the Supreme
Court of the State of Illinois sustaining a tax assessed against
plaintiff in error under the inheritance tax law of that state,
passed June 15, 1895, entitled "An Act to Tax Gifts, Legacies, and
Inheritances in Certain cases, and to Provide for the Collection of
the Same." Laws of 1895, p. 301.
The facts are as follows: Fanny Speed, a citizen and resident of
Kentucky, died seised of certain real estate in the City of
Chicago. She devised a one-half interest to plaintiff in error, to
be used as part of its educational fund, "to be held, invested, and
administered" as other properties forming a part of that fund. The
will was probated in the probate court of Cook County, State of
Illinois. An inheritance tax of $6,280.50 was assessed by the
county judge against plaintiff in error based on the value of the
interest devised.
Plaintiff in error was incorporated by an act of the Legislature
of the State of Kentucky to form an educational fund for the
promotion of literature, education, art, morality, and religion.
Its funds are held and used exclusively for such purposes, and are
required to be wholly expended within the State of Kentucky. It is
not permitted to make dividends or distribution of profits or
assets among its members or stockholders. It does not have or
maintain an office in the State of Illinois, or engage in
educational or religious work therein.
From the action of the county judge imposing the tax, plaintiff
in error appealed to the County Court of Cook County and assigned
as grounds of appeal: (1) that by reason of its organization and
the purposes of its organization, as shown by the record, it was
exempt from such tax under the Act of May 10, 1901, amending the
Act of June 15, 1895; (2) for that the imposition of such tax upon
it (the plaintiff in error), when
Page 203 U. S. 559
corporations organized for like purposes under the laws of the
state were exempt therefrom, was in conflict with the Constitution
of the State of Illinois, and rendered said act void as to
plaintiff in error, as in conflict with the Fourteenth Amendment of
the Constitution of the United States, in that it abridged the
privileges and immunities of plaintiff in error, who was a citizen
of the United States, and denied to it the equal protection of the
laws. The county court sustained the tax ,and the supreme court
affirmed the judgment. This writ of error was then sued out.
The assignment of errors in this Court, omitting the
specification of error based on the Constitution of the state, is
the same as that in the state courts.
It is enough for our purpose to say that section one of the act
of 1895 subjects to a tax all property situated within the state,
which shall, by will or by the intestate laws, pass from any person
who may die seised or possessed of the same. The act was amended in
1901 by adding thereto the following section:
"When the beneficial interest of any property or income
therefrom shall pass to or for the use of any hospital, religious,
educational, Bible, missionary, tract, scientific, benevolent, or
charitable purpose, or to any trustee, bishop, or minister of any
church or religious denomination, held and used exclusively for the
religious, educational, or charitable uses and purposes of such
church or religious denomination, institution, or corporation, by
grant, gift, bequest, or otherwise, the same shall not be subject
to any such duty or tax, but this provision shall not apply to any
corporation which has the right to make dividends or distribute
profits or assets among its members."
The supreme court decided that this amendment did not apply to
"corporations created under the laws of a sister state." And also
decided, as so construed, the amendment was not repugnant to the
Constitution of the United States. The court said:
"A clear distinction exists between domestic corporations
Page 203 U. S. 560
and corporations organized under the laws of other states. Such
corporations fall naturally into their respective classes. Over the
one -- that which the state has created -- the state has certain
powers of control, and the other is beyond its jurisdiction. Those
of its own creation have been endowed with corporate powers for the
purpose of subserving the interests of the state and its people;
those which have been given life by the laws of a sister state have
entirely different ends and objects to accomplish. The lawmaking
power would find many weighty considerations authorizing the
classification of foreign and domestic corporations into different
classes and justifying the creation of liability on the part of
foreign corporations to pay a tax on the right to take property by
descent, devise, or bequest, under the laws of the state, and at
the same time leaving the right of a domestic corporation so to
take free of any such exaction."
It will be seen by a reference to the assignment of errors that
the ground of the attack by the plaintiff in error on the validity
of the tax assessed against it is that the imposition of the tax
upon it, while other corporations organized for like purposes under
the laws of Illinois are exempt, renders the Act of May 10, 1901,
void as to plaintiff in error. And in their argument, counsel
say:
"It is effect given by the Supreme Court of Illinois to this
amendment (the act of 1901) that violates the rights claimed by the
plaintiff in error under the Constitution of the United
States."
The construction of the act by the supreme court we must accept
as determining the meaning of the act. In other words, we must
regard the act as if the legislature had, in explicit language,
excluded from its provisions foreign corporations. If this renders
the act void, plaintiff in error, whether its argument be tenable
or untenable, seems to be put in the dilemma urged by the defendant
in error, and an affirmance of the judgment is required. If the Act
of May 10, 1901, is invalid, it cannot give exemption from taxation
to either domestic or foreign corporations, and plaintiff in error
was rightly taxed under the Act of June 15, 1895.
Page 203 U. S. 561
Plaintiff in error, of course, does not desire to take exemption
from domestic corporations. It desires to remove the discriminatory
effect of the amendment of May 10, 1901, by including in its bounty
foreign corporations. Can this be done? May a court, by
construction, put into a law that which the legislature has left
out? There is a difference between burdens and benefits, and it may
well be that a law which confers the latter upon some persons, and
thereby increases burdens on others, may be declared invalid by the
courts. But if the courts may strike down privileges, may they
extend favors and make objects of bounty those whom the legislature
has excluded? The questions raise important considerations, but we
may pass them, because the contention that the act of 1901 is
invalid encounters an insuperable obstacle in the power of the
state to classify objects of legislation and discriminate between
classes. This power is not unconstitutionally exercised by
legislation which exempts the religious and educational
institutions of the state from an inheritance tax and subjects
educational and religious institutions of other states to the tax.
Regarding alone the purposes of the institutions, no difference may
be perceived between them, but regarding the spheres of their
exercise and the benefits derived from their exercise, a difference
is conspicuous. It is this benefit that may have constituted the
inducement of the legislation.
Plaintiff in error contests the classification of the act of
1901 and the conclusions deduced from it in an able argument. We do
not reply to the argument in detail, because we have defined so
often the principles of classification that we must regard
repetition as unnecessary. An observation or two, however, may be
worthwhile. It is contended that the exemption of the amendment of
1901 "is not limited by the decision of the supreme court to
corporate takers or users," and that the decision, by treating the
act "as a grant of privileges and immunities to corporations,"
ignored "the test of use found in the inquiry
To what purpose
is the beneficial
Page 203 U. S.
562
interest in the property devoted?'" and the consideration
that there was no necessity for corporate rate agency in that
connection. The result of this is, it is urged -- that the court
made the "power of state visitation and control" over corporations
"the test of taxability or nontaxability upon the right of
succession." Denying this to be the test, and contending that the
test should be the use to which the property is devoted, and the
question of tax or freedom from tax determined thereby, and
asserting that plaintiff became a person within the jurisdiction of
the state by going there to take title to property there situated,
and by probating the will of Mrs. Speed as evidence of such title,
it is deduced that it was not competent for the state to tax the
property of plaintiff in error at one rate and the property of
corporations organized under her laws at another rate.
It must be kept in mind that the controversies in this case
depend upon the power of the state over inheritances, and the
conditions she may put upon them in the exercise of that power. And
this is prominent in the decision of the supreme court. In
considering this power and classification in the exercise of this
power, the court took into account the greater control and
direction the state had over domestic than over foreign
corporations. It did not put out of view the uses of property
expressed in the act of 1901, nor ignore the consideration that
there was no necessity for a corporate agency to execute those
uses. The case presented especially a comparison of the rights of
corporations, but the decision was broad enough to consider natural
persons. "In laying such a tax" (an inheritance tax), the court
said,
"the legislature may consider the relation which the person or
corporation given the right of succession sustains to the deceased,
to the property, or to the state, and may regulate the amount of
the tax to be required in view of such relation, and, in exercising
this power, may lay a tax on the right of one class of persons or
corporations to take, and may deem it wise to impose no tax upon
the right of other classes of persons or corporations to
Page 203 U. S. 563
take."
A federal court would hesitate indeed to put impediments on this
power or declare invalid any classification of persons or
corporations that had reasonable regard to the purposes of the
state and its legislation. And it cannot be said that, if a state
exempt property bequeathed for charitable or educational purposes
from taxation, it is unreasonable or arbitrary to require the
charity to be exercised or the education to be bestowed within her
borders and for her people, whether exercised through persons or
corporations.
Judgment affirmed.