Held: California's motion for leave to file a bill of
complaint seeking determination of whether Howard Hughes was
domiciled in California or Texas at the time of his death is
granted.
(a) The bill of complaint states a "controversy" between two
States within this Court's exclusive jurisdiction under 28 U.S.C. §
1251(a). California and Texas are undeniably adversaries in this
action, since each State's authority to impose a death tax on the
intangibles owned by a decedent depends on the decedent's having
been a domiciliary of that State, and it is the law of each State
that an individual has but one domicile. Thus, the outcome of this
action will determine which State is entitled to levy death taxes
on the Hughes estate. Moreover, California's allegations, although
not yet proved, indicating that the estate was insufficient to
satisfy the total amount of potential death tax claims by both
States, are sufficient under
Texas v. Florida,
306 U. S. 398, to
characterize this case as a "controversy" between two States for
purposes of § 1251(a).
(b) It is appropriate that this Court exercise its jurisdiction
in this case. When California's previous motion for leave to file
its complaint was denied,
437 U. S. 437 U.S.
601, several Members of the Court suggested that the need to
exercise original jurisdiction might be obviated by an action in a
federal district court, under the Federal Interpleader Act, to
determine Hughes' domicile. However, this Court's decision in
Cory v. White, ante p.
457 U. S. 85, holds
that such a statutory interpleader action cannot be brought. Thus,
the precondition of nonavailability of another forum, necessary for
this Court's exercise of original jurisdiction, is met.
PER CURIAM.
In this motion, California seeks leave to file a complaint
against Texas under this Court's original jurisdiction. The
proposed complaint asks us to decide whether Howard Hughes was
domiciled in California or Texas at the time of his death. The
decision about domicile could determine which State is entitled to
levy death taxes on the estate.
This motion renews the one which California made in November,
1977. At that time, we denied leave to file.
California
Page 457 U. S. 165
v. Texas, 437 U. S. 601
(1978). Following the suggestion of four Justices who concurred in
California v. Texas, the estate then sought a
determination of Hughes' domicile by filing an interpleader action
under 28 U.S.C. § 1335 in Federal District Court. This motion for
leave to file a complaint accompanied the petition for certiorari
in
Cory v. White, ante p.
457 U. S. 85, in
which California taxing officials requested review of the decision
of the Fifth Circuit holding that the Federal Interpleader Act
provided a jurisdictional basis for resolving the dispute.
We granted certiorari in
Cory v. White, 452 U.S. 904
(1981), and today have held that the Federal Interpleader Act, 28
U.S.C. § 1335, does not give a federal district court jurisdiction
to resolve inconsistent death tax claims by the officials of two
States.
See ante at
457 U. S. 91. We
reached that decision because the suit is barred by the Eleventh
Amendment under
Worcester County Trust Co. v. Riley,
302 U. S. 292
(1937). We now also conclude that California's motion for leave to
file should be granted.
First, California's bill of complaint states a "controversy"
between California and Texas within the exclusive jurisdiction of
this Court under 28 U.S.C. § 1251(a). It is undisputed that each
State's authority to impose a death tax on the intangibles owned by
a decedent depends on the decedent's having been a domiciliary of
that State. Also, it is the law of each State that an individual
has but one domicile. Thus only one State is entitled to impose
death taxes; the outcome of this action would determine which State
is privileged to tax. The other would be barred from doing so. It
is apparent, therefore, that California and Texas are asserting
inconsistent claims, and are undeniably adversaries in this
action.
Moreover, in its Memorandum in Support of Motion to File Bill of
Complaint 6, California asserts:
"The effective rate of tax in California on all amounts in
excess of $400,000 is 24% (
see CAL.REV. & TAX CODE §
13406(g)); the effective rate of tax in Texas (including
Page 457 U. S. 166
the so-called 'pick-up tax') on amounts exceeding $1,000,000 is
approximately 16% (
see TEX.TAX CODE ANN.ARTS. 14.05,
14.12); and the federal estate tax on amounts in excess of
$10,000,000 is 77%, less a credit of 16% for state death taxes
(
see 26 U.S.C. §§ 2001, 2011). The combined marginal rate
of tax is therefore 101%."
(Footnote omitted.) California adds that interest on the unpaid
taxes will further deplete the estate. Although these allegations
have not been proved, they are sufficient under
Texas v.
Florida, 306 U. S. 398
(1939), to characterize this case as a "controversy" between two
States within the meaning of 28 U.S.C. § 1251(a). [
Footnote 1]
In
Texas v. Florida, supra, this Court, raising the
issue
sua sponte, held that it had original jurisdiction
over a suit "brought to determine the true domicile of decedent as
the basis of rival claims of four states for death taxes upon his
estate." 306 U.S. at
306 U. S. 401.
None of the States had reduced its claims to judgments, but all
conceded that the estate was
Page 457 U. S. 167
insufficient to satisfy the total amount of taxes claimed. The
Court compared the suit to a bill in the nature of interpleader,
which permits a plaintiff threatened with rival claimants to the
same debt or legal duty to bring an interpleader action before the
institution of the independent suits. On the basis of this analogy,
the Court concluded:
"When, by appropriate procedure, a court possessing equity
powers is . . . asked to prevent the loss which might otherwise
result from the independent prosecution of rival but mutually
exclusive claims, a justiciable issue is presented for adjudication
which because it is a recognized subject of the equity procedure
which we have inherited from England, is a 'case' or 'controversy,'
within the meaning of the Constitutional provision; and when the
case is one prosecuted between states, which are the rival
claimants, and the risk of loss is shown to be real and
substantial, the case is within the original jurisdiction of this
Court conferred by the Judiciary Article."
Id. at
306 U. S.
407-408.
As Justice Stewart wrote when California fist petitioned this
Court to resolve its dispute with Texas over Hughes' estate:
"The facts alleged in the complaint now before us are
indistinguishable in all material respects from those on which
jurisdiction was based in
Texas v. Florida."
California v. Texas, 437 U.S. at
437 U. S. 606
(concurring opinion). We agree. [
Footnote 2]
Page 457 U. S. 168
Thus, this dispute is a controversy between two States within
our original jurisdiction under 28 U.S.C. § 1251(a).
Second, it is appropriate to exercise our jurisdiction in this
case. A determination that this Court has original jurisdiction
over a case, of course, does not require us to exercise that
jurisdiction. We have imposed prudential and equitable limitations
upon the exercise of our original jurisdiction. As we explained in
Illinois v. City of Milwaukee, 406 U. S.
91,
406 U. S. 93-94
(1972):
"We construe 28 U.S.C. § 1251(a)(1), as we do Art. III, § 2, cl.
2, to honor our original jurisdiction, but to make it obligatory
only in appropriate cases. And the question of what is appropriate
concerns, of course, the seriousness and dignity of the claim; yet,
beyond that, it necessarily involves the availability of another
forum where there is jurisdiction over the named parties, where the
issues tendered may be litigated, and where appropriate relief may
be had. We incline to a sparing use of our original jurisdiction so
that our increasing duties with the appellate docket will not
suffer."
At the time we decided
California v. Texas, it seemed
to several Members of the Court that statutory interpleader might
obviate the need to exercise original jurisdiction. JUSTICE
BRENNAN, for example, explained:
"If we have jurisdiction at all, that jurisdiction does not
attach until it can be shown that the two States may possibly be
able to obtain conflicting adjudications of domicile. That showing
has not been made at this time in this case, since it may well be
possible for the Hughes estate to obtain a judgment under the
Federal Interpleader Statute, 28 U.S.C. § 1335, from a United
States district court, which would be binding on both California
and Texas. In this event, the precondition for our original
jurisdiction would be lacking. Accordingly,
Page 457 U. S. 169
I would deny California's motion, at least until such time as it
is shown that such a statutory interpleader action cannot or will
not be brought."
437 U.S. at
437 U. S.
601-602.
Our decision in
Cory v. White has now shown that such a
statutory interpleader action cannot be brought. Thus, the
precondition for the exercise of original jurisdiction has been
met.
There were several other uncertainties that affected the case
when we denied California's earlier motion. At that time, Texas
urged that the controversy was not ripe because of the pending
claim of the Howard Hughes Medical Institute that a "lost will"
left the entire estate to it and the contention that the so-called
"Mormon Will" was valid. A jury has since rejected the "Mormon
Will," the Nevada Supreme Court and the Texas Probate Court the
"lost will." Another changed circumstance is the expiration of a
conditional settlement agreement between California and the estate.
Texas had argued because of this allegedly collusive agreement, the
case was not a justiciable case or controversy.
We conclude that our original jurisdiction is properly invoked
under
Texas v. Florida, and we grant California leave to
file its bill of complaint. The defendants shall have 60 days to
answer.
It is so ordered.
[
Footnote 1]
Texas asserts that California has not demonstrated the
jurisdictional prerequisite of showing a "threatened injury" of
"serious magnitude and imminent." Brief in Opposition to Motion for
Leave to File 6, quoting
Alabama v. Arizona, 291 U.
S. 286,
291 U. S. 292
(1934). Texas explains that the true value of the estate is subject
to dispute and litigation, and that the estate can fully satisfy
all potential death tax claims against it even under California's
own valuation.
The Court in
Texas v. Florida, however, required only
that
"[t]he risk that decedent's estate might constitutionally be
subjected to conflicting tax assessments in excess of its total
value, and that the right of complainant or some other state to
collect the tax might thus be defeated was a real one."
306 U.S. at
306 U. S. 410.
The claims before us here are no more speculative than the ones
there. As that case recognized, to bring an interpleader suit,
"[a] plaintiff need not await actual institution of independent
suits; it is enough if he shows that conflicting claims are
asserted, and that the consequent risk of loss is substantial."
Id. at
306 U. S. 406.
Thus, California's allegations are sufficient to present a
controversy within the meaning of 28 U.S.C. § 1251(a). Despite the
suggestion that we do so, we decline to overrule
Texas v.
Florida.
[
Footnote 2]
As in
Texas v. Florida, the idiosyncratic pattern of
the decedent's life provides a basis for more than one State's
claims. Hughes spent much of his time in California, and many of
his business activities were based there. He was, however, born in
Texas, and long continued to use Texas as his mailing address and
sometimes stated that Texas was his domicile. Indeed, a jury in
Texas probate proceedings has already found Hughes to have been a
domiciliary of Texas at the time of his death.
The administrator of Hughes' estate timely perfected an appeal
of that judgment. Brief for Respondent Lummis in
Cory v.
White, O.T. 1981, No. 80-1556, p. 5. The Texas Court of Civil
Appeals stayed the appeal of the Texas domicile judgment pending
the outcome of the federal interpleader action.
Id. at
7.
JUSTICE POWELL, with whom JUSTICE MARSHALL, JUSTICE REHNQUIST,
and JUSTICE STEVENS join, dissenting.
In
Cory v. White, ante at
457 U. S. 89,
the Court today reaffirms the holding of
Worcester County Trust
Co. v. Riley, 302 U. S. 292
(1937), that
"inconsistent determinations by the courts of two States as to
the domicile of a taxpayer [do] not raise a substantial federal
constitutional question."
Under
Worcester County, there is no constitutional bar
to both Texas'
Page 457 U. S. 170
and California's taxing the Hughes estate on the ground that he
was a domiciliary.
Having reaffirmed the authority of
Worcester County,
the Court concludes that "California and Texas are asserting
inconsistent claims and are undeniably adversaries in [the
interpleader action]."
Ante at
457 U.S. 165. But its own premises will
not support this conclusion. If both States legally can tax the
Hughes estate, a controversy between them would arise only if both
were to obtain money judgments against the estate and, further, if
the estate then were to prove insufficient to satisfy both claims.
Yet it is no more clear today than it was in 1978, when we
unanimously decided
California v. Texas, 437 U.
S. 601 (1978), that this situation ever will occur.
Thus, under the Court's own assumptions, there is no ripe
controversy between the States, and no basis for our consideration
of the original complaint in No. 88, Original.
As if discomfited by the logic of its position, the Court argues
that the jurisdictional allegations here at least are "no more
speculative,"
ante at
457 U. S. 166,
n. 1, than those in
Texas v. Florida, 306 U.
S. 398 (1939). Yet as Justice Stewart argued
persuasively in our 1978 decision in
California v. Texas,
supra, it is inescapable that
Texas v. Florida was
wrongly decided.
See 437 U.S. at
437 U. S. 606,
437 U. S.
611-612 (Stewart, J., concurring). The mere possibility
of inconsistent state determinations of domicile, resulting in a
still more remote possibility of the estate's being insufficient to
satisfy the competing claims, simply does not give rise to a case
or controversy in the constitutional sense.
"The necessity that the plaintiff who seeks to invoke judicial
power stand to profit in some personal interest remains an Art. III
requirement. A federal court cannot ignore this requirement without
overstepping its assigned role in our system of adjudicating only
actual cases and controversies."
Simon v. Eastern Kentucky Welfare Rights Org.,
426 U. S. 26,
426 U. S. 39
(1976).
See Valley Forge Christian College v. Americans United
for Separation of Church and State, 454 U.
S. 464,
454 U. S. 472
(1982);
Warth v. Seldin, 422 U. S. 490,
422 U. S. 508
(1975).
Page 457 U. S. 171
Nor is the Court entitled to base its finding of original
jurisdiction on an "analogy" between the original action and "a
bill in the nature of interpleader."
Ante at
457 U. S. 167.
Under the Interpleader Act, the stakeholder is the "plaintiff." 28
U.S.C. § 1335. Having been notified of claims by two or more
"claimants," the stakeholder normally would have standing to
litigate the validity of each of the individual claims. The
presence of these justiciable controversies between stakeholder and
claimants satisfies the "case or controversy" requirement of Art.
III. Interpleader jurisdiction merely provides for convenient
resolution in a single forum. Interpleader jurisdiction thus is
irrelevant to the question whether there is an independently
justiciable controversy "between" States.