Article 7 of the treaty with Denmark of April 26, 1826, 8 Stat.
340, (renewed April 11, 1857, 11 Stat. 719) places no limitation
upon the right of either government to deal with its own citizens
and their property within its dominion.
Therefore, where a native of Denmark, who became a naturalized
citizen of the United States, died a resident and property owner in
the Iowa, and in the settlement there of his estate, inheritance
taxes were imposed in respect of legacies to subjects and residents
of Denmark, the treaty affords the legatees no basis for
complaining of the discrimination of the Iowa law (1907
Supp.Code,
Page 245 U. S. 171
§ 1467), which taxes legacies to nonresident aliens higher than
those given under similar conditions to residents of the state
without regard to the residence or nationality of the testator.
The favored nation clause in Article 1 of the above cited treaty
with Denmark is applicable only "in respect of commerce and
navigation;" it does not apply where the discrimination complained
of is in the rates of state inheritance taxes.
166 Ia. 617 affirmed.
The case is stated in the opinion.
MR. CHIEF JUSTICE WHITE delivered the opinion of the Court.
Anna M. Anderson, a native of Denmark, but a naturalized citizen
of the United States, died in the State of Iowa, where she resided
and owned property. By her will, she gave money legacies to her
nephews and nieces who were subjects of the Kingdom of Denmark and
resided therein. By the death duties imposed by the law of the
State of Iowa, a higher rate was imposed on legacies made to
nonresident aliens than was payable on those given under similar
conditions to residents of Iowa, whether made by a citizen or by
resident or nonresident aliens, Section 1467, 1907 Supplement to
the Code of Iowa. The representative of the estate of Anderson, in
filing his accounts, having credited himself with the sum due to
the state on the legacies, which he had paid, the foreign legatees
opposed the allowance of such
Page 245 U. S. 172
credit on the ground that the charge of a greater sum to them
because they were aliens and nonresidents than would have been
charged against them had they been residents was illegal because in
conflict with a treaty between the United States and Denmark. The
case is here to review the action of the court below rejecting such
contention and upholding the validity of the charge.
In re
Anderson's Estate, 166 Ia. 617.
The court, conceding that, if the treaty were applicable, it
would be controlling, based its conclusion solely on the ground
that the treaty, when rightly considered, did not apply, and, in
the argument at bar, the error of this conclusion is the sole
ground relied upon.
The treaty is that of April 26, 1826 (8 Stat. 340) renewed in
1857 (11 Stat. 719), and the particular clauses invoked are Article
1, the favored nation clause, and Article 7, dealing more directly
with the subject under consideration. We postpone momentarily the
first to come at once to the latter. The article is as follows:
"The United States and his Danish Majesty mutually agree that no
higher or other duties, charges or taxes of any kind shall be
levied in the territories or dominions of either party upon any
personal property, money, or effects of their respective citizens
or subjects on the removal of the same from their territories or
dominions reciprocally, either upon the inheritance of such
property, money, or effects or otherwise than are or shall be
payable in each state upon the same when removed by a citizen or
subject of such state, respectively."
It is obvious that the article places restrictions upon the
authority of the respective countries to impose taxes, duties, or
charges under the circumstances and conditions for which it
provides. Conceding that it requires construction to determine
whether the prohibitions embrace taxes generically considered, or
death duties, or excises, on the right to transfer and remove
property, singly or
Page 245 U. S. 173
collectively, we are of the opinion that the duty of
interpretation does not arise, since in no event would any of the
prohibitions be applicable to the case before us. We are
constrained to this conclusion because the case here presented
concerns only the power of the State of Iowa to deal with a citizen
of that state and her property there situated, while the
prohibitions of the treaty, giving to them their widest
significance, apply only to a citizen of Denmark and his right to
dispose of his property situated in the State of Iowa. This is
undoubted because there is no controversy as to the first, the
citizenship in Iowa, and there is not room for substantial doubt as
to the latter, since, on the face of the treaty. the contractual
limitations which it provides are manifestly intended not to
control or limit the right of either of the governments to deal
with its own citizens and their property within its borders, but
were solely intended to restrict the power of both of the
governments to deal with citizens of the other and their property
within its dominions. But if the mere letter of portions of the
article, when separately considered, would leave room for any doubt
on the subject, it would be dispelled by the context and by the
consideration that the foundation of the provision is the
recognition of the plenary power of each country to legislate
according to its conceptions of public welfare as to its own
citizens and their property within its jurisdiction. Indeed, that
which is contracted against is merely a departure by discrimination
by either one of the countries against the citizens of the other
and their property therein from the legislation governing their own
citizens. In other words, the right of the citizens of each of the
contracting countries reciprocally to own, dispose of, or transmit
their property situated in the other country, free from provisions
or restrictions discriminating because of alienage, is in the
largest possible sense that which is protected by the treaty. And,
conversely, this being true, it follows also that the
Page 245 U. S. 174
treaty did not protect the right of the citizens of either
country to acquire by transfer or inheritance property situated in
the other belonging to its own citizens free from the restraints
imposed by the law of such country on its own citizens, even
although such restraints would not have been applicable in case the
property had been disposed of or transmitted to a citizen.
The ruling in
Frederickson v.
Louisiana, 23 How. 445, while it concerned a treaty
with a different country, is here aptly illustrative and
persuasively controlling. In that case, the contention was that
limitations contained in a treaty between the United States and the
King of Wurtemburg forbidding discrimination as to the disposal or
transmission of their property by subjects of the King of
Wurtemburg were applicable to property in the State of Louisiana of
a citizen of that state because of the accidental circumstance that
the property had passed by the death of such citizen to subjects of
the King of Wurtemburg, nonresidents in the United States. In
holding the contention to be unfounded it was said (p.
64 U. S.
447):
"But we concur with the Supreme Court of Louisiana in the
opinion that the treaty does not regulate the testamentary
dispositions of citizens or subjects of the contracting powers in
reference to property within the country of their origin or
citizenship. The cause of the treaty was that the citizens and
subjects of each of the contracting powers were or might be subject
to onerous taxes upon property possessed by them within the states
of the other by reason of their alienage, and its purpose was to
enable such persons to dispose of their property paying such duties
only as the inhabitants of the country where the property lies pay
under like conditions. The case of a citizen or subject of the
respective countries residing at home, and disposing of property
there in favor of a citizen or subject of the other, was not in the
contemplation
Page 245 U. S. 175
of the contracting powers, and is not embraced in this article
of the treaty."
And this view disposes of the elaborate argument concerning the
right of the foreign legatees to remove the property, as there is
here no question of a burden placed by the State of Iowa on the
right to remove other than that which the argument assumes may have
indirectly resulted from the payment of the lawful duty imposed by
the State of Iowa upon its own citizens and as to their property
within its own borders. The duty to pay on such property which
preceded and accompanied the right of such foreign legatees was not
a burden upon their right to remove their property, as such right
of property on their part was dependent on the payment, and could
not and did not arise until the payment was made.
United States
v. Perkins, 163 U. S. 625.
This leaves only the contention as to the favored nation clause
contained in the first article of the treaty. But as to that it
suffices to say that the argument does not take into view, but
disregards, the words by which the clause is limited and which
expressly make it applicable only "in respect of commerce and
navigation," a limitation which it has been settled does not
embrace the subject we are now dealing with.
Mager v.
Grima, 8 How. 490,
49 U. S.
494.
Affirmed.