Both Texas and California assert the right to levy state death
taxes on the estate of Howard Hughes, the taxing officials of each
State claiming that Hughes was domiciled in their State at the time
of his death. The administrator of the estate filed an action in
Federal District Court under the Federal Interpleader Act, alleging
that the respective state officials were seeking to tax the estate
on the basis of inconsistent claims. The District Court dismissed
the action for lack of subject matter jurisdiction because of the
failure to satisfy the Act's requirement that there be diversity of
citizenship between at least two adverse parties. The Court of
Appeals reversed, holding that the requisite diversity was present
between the administrator and the County Treasurer of Los Angeles
County. The court rejected the State's claim that, although the
suit was nominally against state officials, it was in effect a suit
against two sovereign States barred by the Eleventh Amendment.
Held: The Eleventh Amendment bars the statutory
interpleader action.
Worcester County Trust Co. v. Riley,
302 U. S. 292.
Contrary to the Court of Appeals' view,
Edelman v. Jordan,
415 U. S. 651, did
not overrule
Worcester County Trust Co. Pp.
457 U. S.
89-91.
629 F.2d 397, reversed.
WHITE, J., delivered the opinion of the Court, in which BURGER,
C.J., and BLACKMUN, REHNQUIST, and O'CONNOR, JJ., joined. BRENNAN,
J., filed an opinion concurring in the judgment,
post, p.
457 U. S. 91.
POWELL, J., filed a dissenting opinion, in which MARSHALL and
STEVENS, JJ., joined,
post, p.
457 U. S.
92.
Page 457 U. S. 86
JUSTICE WHITE delivered the opinion of the Court.
In this case, both Texas and California assert the right to levy
state death taxes on the estate of Howard Hughes. The laws of each
State impose an inheritance tax on the real and tangible personal
property located within its borders, and upon the intangible
personalty, wherever situated, of a person domiciled in the State
at the time of death. Under the laws of Texas and California, an
individual has but one domicile at any time. Taxing officials in
each State assert that Howard Hughes was domiciled in their State
at the time of his death. The issue before us is whether the
Federal Interpleader Act, 28 U.S.C. § 1335, provides a
jurisdictional basis for resolution of inconsistent death tax
claims by the officials of two States.
I
This case is the sequel to
California v. Texas,
437 U. S. 601
(1978). There, California petitioned for leave to file a complaint
against Texas under this Court's original jurisdiction. At that
time, we denied the motion. In concurring opinions, however, four
Justices suggested that a determination of Hughes' domicile might
be obtained in federal district court pursuant to the Federal
Interpleader Act, 28 U.S.C. § 1335. [
Footnote 1]
Page 457 U. S. 87
Three weeks after the decision in
California v. Texas,
the administrator of the estate filed a statutory interpleader
action in the United States District Court for the Western District
of Texas. Asserting that the officials of the two States were
seeking to tax the estate on the basis of inconsistent claims that
each of their respective States was Howard Hughes' domicile at
death, it requested the District Court to adjudicate the issue of
domicile. The District Court entered a temporary restraining order
prohibiting the California and Texas taxing officials from pursuing
domicile-based inheritance tax claims in any other forum, including
their own state courts.
The District Court then dismissed for lack of subject matter
jurisdiction for failure to satisfy the requirement of § 1335 that
there be diversity of citizenship between at least two adverse
claimants. It found that the administrator was not a claimant.
Among the claimants, it held that the County Treasurer for Los
Angeles County was a citizen of California for diversity purposes,
citing
Moor v. County of Alameda, 411 U.
S. 693 (1973). The court ruled, however, that the State
of Texas, rather than its taxing officials, was the opposing
claimant, and that, because a State is not a citizen of itself for
diversity purposes,
Postal Telegraph Cable Co.
v.
Page 457 U. S. 88
Alabama, 155 U. S. 482
(1894), the action did not involve two or more adverse claimants of
diverse citizenship as required by the statute.
The Court of Appeals for the Fifth Circuit reversed the order of
dismissal.
Lummis v. White, 629 F.2d 397 (1980). In
addition to the County Treasurer, it found the administrator of the
estate, a citizen of Nevada, to be a claimant for the purposes of
statutory interpleader. It recognized that
Treinies v. Sunshine
Mining Co., 308 U. S. 66
(1939), held that a citizenship of a disinterested stakeholder
could not be considered in determining interpleader jurisdiction.
Reasoning, however, that here the administrator's legal duty of
preserving the estate's assets from the double death tax liability
and his assertion that Hughes was domiciled in Nevada, which has no
state death tax, made the administrator an interested stakeholder,
the court further held that the citizenship of an interested
stakeholder may be considered for purposes of establishing
diversity under § 1335. The requisite diversity -- between the
administrator and the County Treasurer of Los Angeles County -- was
therefore present.
The Court of Appeals went on to reject the States' claim that,
although the suit was nominally against state officials, it was in
effect a suit against two sovereign States barred by the Eleventh
Amendment. Recognizing that
Worcester County Trust Co. v.
Riley, 302 U. S. 292
(1937), had squarely held that an interpleader action in all
critical respects similar to this one was barred by the Eleventh
Amendment, the Court of Appeals, relying on the concurring views of
four Justices in
California v. Texas, held that
Edelman v. Jordan, 415 U. S. 651
(1974), had silently, but effectively, overruled
Worcester, and that the Eleventh Amendment as interpreted
in
Edelman did not bar the interpleader action.
The California officials petitioned for certiorari and, at the
same time, filed a new motion seeking leave to file a complaint
Page 457 U. S. 89
against Texas under this Court's original jurisdiction. Because
of the troubling issues involving federal court jurisdiction in
such disputes, we granted certiorari. 452 U.S. 904.
II
In
Worcester County Trust Co. v. Riley, supra, the
States of California and Massachusetts each claimed to be the
domicile of a decedent and to have the right to assess death taxes
on his entire intangible estate. A federal interpleader action
followed, the estate naming as defendant the revenue officers of
California and Massachusetts. This Court unanimously held that the
case was, in reality, a suit against the States, and that it was
barred by the Eleventh Amendment. In arriving at this conclusion,
the Court applied the accepted rules (1) that
"a suit nominally against individuals, but restraining or
otherwise affecting their action as state officers, may be, in
substance, a suit against the state, which the Constitution
forbids,"
302 U.S. at
302 U. S. 296,
and (2) that,
"generally, suits to restrain action of state officials can,
consistently with the constitutional prohibition, be prosecuted
only when the action sought to be restrained is without the
authority of state law or contravenes the statutes or Constitution
of the United States."
Id. at
302 U. S. 297.
The Court held that there could be no credible claim of a violation
of federal law, since it was clear from prior cases that
inconsistent determinations by the courts of two States as to the
domicile of a taxpayer did not raise a substantial federal
constitutional question. The Court also concluded that the claim
that the officials were acting without authority under state law
was insufficient. Hence,
"[s]ince the proposed action is the performance of a duty
imposed by the statute of the state upon state officials through
whom alone a state can act, restraint of their action, which the
bill of complaint prays, is restraint of state action, and the suit
is, in substance, one against the State which the Eleventh
Amendment forbids."
Id. at
302 U. S.
299-300.
Page 457 U. S. 90
The Court of Appeals' opinion that
Edelman v. Jordan
had overruled
Worcester rested on a passage in the
Edelman opinion that it interpreted as limiting the bar of
the Eleventh Amendment to suits "by private parties seeking to
impose a liability which must be paid from public funds in the
state treasury." 415 U.S. at
415 U. S. 663.
Because the interpleader plaintiff, the administrator of the
estate, had sought only prospective relief, the appellate court
held that the Eleventh Amendment did not bar his suit.
We are unpersuaded by this view of
Edelman. That case
involved a suit against state officials claiming that their
administration of a particular federal-state program was contrary
to federal regulations and the Constitution. Among other things,
the plaintiffs sought a judgment for benefits that had not been
paid them. The case was against individual officers who allegedly
were violating federal law, and it therefore arguably fell outside
the reach of the Eleventh Amendment under
Ex parte Young,
209 U. S. 123
(1908).
Edelman held, however, that the case was, in
effect, a suit against the State itself, because a judgment payable
from state funds was demanded. It was correctly noted that
Ford
Motor Co. v. Department of Treasury of Indiana, 323 U.
S. 459 (1945), was authority for this result.
Edelman did not hold, however, that the Eleventh
Amendment never applies unless a judgment for money payable from
the state treasury is sought. [
Footnote 2] It would be a novel proposition indeed that
the Eleventh Amendment does not bar a suit to enjoin the State
itself simply because no money judgment is sought. The Eleventh
Amendment reads:
"The Judicial power of the United States shall not be construed
to
Page 457 U. S. 91
extend to any suit in law or equity, commenced or prosecuted
against one of the United States by Citizens of another State. . .
."
Thus, the Eleventh Amendment, by its terms, clearly applies to a
suit seeking an injunction, a remedy available only from equity. To
adopt the suggested rule, limiting the strictures of the Eleventh
Amendment to a suit for a money judgment, would ignore the explicit
language and contradict the very words of the Amendment itself.
Edelman did not embrace, much less imply, any such
proposition.
Neither did
Edelman deal with a suit naming a state
officer as defendant, but not alleging a violation of either
federal or state law. Thus, there was no occasion in the opinion to
cite or discuss the unanimous opinion in
Worcester that
the Eleventh Amendment bars suits against state officers unless
they are alleged to be acting contrary to federal law or against
the authority of state law.
Edelman did not hold that
suits against state officers who are not alleged to be acting
against federal or state law are permissible under the Eleventh
Amendment if only prospective relief is sought. Whether or not that
would be the preferable rule,
Edelman v. Jordan did not
adopt it.
Furthermore, if that were to be the law,
Worcester must
in major part be overruled. We are unwilling, however, to overrule
that decision and narrow the scope of the Eleventh Amendment to the
extent that action would entail. We hold that the Eleventh
Amendment bars the statutory interpleader sought in this case. The
judgment of the Court of Appeals is
Reversed.
[
Footnote 1]
The Federal Interpleader Act, 28 U.S.C. § 1335, provides:
"(a) The district courts shall have original jurisdiction of any
civil action of interpleader or in the nature of interpleader filed
by any person, firm, or corporation, association, or society having
in his or its custody or possession money or property of $500 or
more, or having issued a note, bond, certificate, policy of
insurance, or other instrument of value or amount of $500 or more,
or providing for the delivery or payment or the loan of money or
property of such amount or value, or being under any obligation
written or unwritten to the amount of $500 or more, if"
"(1) Two or more adverse claimants, of diverse citizenship as
defined in section 1332 of this title, are claiming or may claim to
be entitled to such money or property, or to any one or more of the
benefits arising by virtue of any note, bond, certificate, policy
or other instrument or arising by virtue of any such obligation;
and if (2) the plaintiff has deposited such money or property or
has paid the amount of or the loan or other value of such
instrument or the amount due under such obligation into the
registry of the court, there to abide the judgment of the court, or
has given bond payable to the clerk of the court in such amount and
with such surety as the court or judge may deem proper, conditioned
upon the compliance by the plaintiff with the future order or
judgment of the court with respect to the subject matter of the
controversy."
"(b) Such an action may be entertained although the titles or
claims of the conflicting claimants do not have a common origin, or
are not identical, but are adverse to and independent of one
another."
[
Footnote 2]
The dissent mischaracterizes
Edelman as asserting that
the Eleventh Amendment bars "only" suits seeking money damages.
Post at
457 U. S. 96.
Edelman recognized the rule
"that a suit by private parties seeking to impose a liability
which must be paid from public funds in the state treasury is
barred by the Eleventh Amendment,"
415 U.S. at
415 U. S. 663,
but never asserted that such suits were the only ones so
barred.
JUSTICE BRENNAN, concurring in the judgment.
In
California v. Texas, 437 U.
S. 601 (1978), I joined in the judgment of the Court
denying California's motion for leave to file an original
complaint. I was of the view that California's motion should be
denied, "at least until such time as it is shown that . . . a
statutory interpleader action cannot or will not be brought."
Id. at
437 U. S. 602.
I also stated that I was "not
Page 457 U. S. 92
so sure as" Justice Stewart and JUSTICE POWELL that
Texas v.
Florida, 306 U. S. 398
(1939), had been wrongly decided. 437 U.S. at
437 U. S. 601.
See id. at
437 U. S. 606
(Stewart, J., concurring);
id. at
437 U. S. 615
(POWELL, J., concurring).
Substantially for the reasons set forth in the opinion of the
Court, it is now clear to me that, so long as
Worcester County
Trust Co. v. Riley, 302 U. S. 292
(1937), remains good law, an interpleader suit in the district
court is not a practical solution to the problem of potential
double taxation presented in cases such as these. As JUSTICE POWELL
persuasively argues in
457 U. S. later
cases, construing the Due Process Clause, have undermined
Worcester County's holding that the unfairness of double
taxation on the basis of conflicting determinations of domicile
does not rise to constitutional dimensions. And JUSTICE POWELL is
surely correct in observing that
"[t]he threat of multiple taxation based solely on domicile
simply is incompatible with the structural principles of a federal
system recognizing as 'fundamental' a constitutional right to
travel."
Post at
457 U. S.
101.
But if
Worcester County is not to be overruled, and
interpleader is not available to provide relief from the
possibility of duplicative taxation of this estate, I think it
appropriate, under
Texas v. Florida, supra, to exercise
our original jurisdiction to decide the present controversy. I
agree with Professor Chafee, quoted
post at
457 U. S. 101,
that "[s]omewhere within [the] federal system we should be able to
find remedies for the frictions which that system creates." Where
such a remedy exists -- even if only in the narrow class of cases
falling within the holding of
Texas v. Florida -- it
should be employed. The exercise of the Court's original
jurisdiction in circumstances such as this is both just and
prudent, and very likely in accordance with the Framer's original
intent.
JUSTICE POWELL, with whom JUSTICE MARSHALL and JUSTICE STEVENS
join, dissenting.
The Court today decides two cases arising from the same set of
facts, the instant case and
California v. Texas, post,
Page 457 U. S. 93
p.
457 U. S. 164.
Both cases involve the efforts of officials of California and Texas
to tax the intangible property of the late Howard Hughes. Each
State asserts its right to tax the Hughes estate on the basis of
Hughes' domicile. Yet both recognize that Hughes could have had
only one domicile at the time of his death.
In order to avoid multiple taxation that all agree would be
unfair, the administrator of the Hughes estate invoked the Federal
Interpleader Act [
Footnote 2/1] as
a means of litigating Hughes' domicile in one federal proceeding.
The administrator alleged in his complaint, however, that Hughes
was not a domiciliary of either California or Texas, but rather of
the State of Nevada. App. 10. [
Footnote
2/2]
In the instant case, the Court holds today that this
interpleader action is barred by the Eleventh Amendment. The Court
does not dispute that multiple taxation based on domicile is
unfair. Nor does it deny that the burden of multiple taxation
ordinarily would fall, not on one of the claiming States, but
solely on the heirs to an estate. But the Court opinion does not
address these issues directly. Rigidly applying an aged and
indefensible precedent, the Court denies the administrator and
heirs of an estate any federal forum in which to resolve
incompatible claims of domicile.
Having held in this case that there is no legal bar to both
California and Texas taxing the Hughes estate on the basis of
domicile, the Court surprisingly concludes in today's decision in
California v. Texas, post, p.
457 U. S. 164,
that there presently exists a justiciable controversy "between"
those two States as to which actually was Hughes' domicile.
[
Footnote 2/3] But these two cases
-- both decided today and both arising from the same set of facts
-- cannot be reconciled. Under the holding in the instant
Page 457 U. S. 94
case that there is no federal prohibition against two States
taxing the Hughes estate on the basis of domicile, the mere
assertion of claims by the two States cannot suffice to establish a
controversy "between" them. In finding that there is a case ripe
for decision, the Court must rely on a double contingency: first,
that both States
might win judgments in their own courts
that Hughes was a domiciliary subject to estate taxation; and
second, that, in such a case, the Hughes estate
might not
be large enough to satisfy both claims. This is too speculative a
foundation to support the conclusion that there is a case or
controversy appropriately within our original jurisdiction.
In my view, the Court's decisions in these cases rest on a
misconception of the rights and obligations created by our federal
system, both in its constitutional and in its statutory aspects.
Accordingly I dissent.
I
The issues before the Court today are substantially identical to
those presented in
California v. Texas, 437 U.
S. 601 (1978). In that case, the Court unanimously
denied California's motion for leave to file an original complaint.
The Court's one-sentence order did not explain our decision to
decline to exercise our exclusive original jurisdiction over
controversies "between" States. Justice Stewart, however, in an
opinion that JUSTICE STEVENS and I joined, stated fully his reasons
for agreeing that there existed no case or controversy between
States. [
Footnote 2/4] He argued
cogently that California's complaint "contain[ed] the seeds of two
distinct lawsuits":
"One is a dispute between two States as to the proper division
of a finite sum of money. The other is a suit in the nature of
interpleader to settle the question of a decedent's
Page 457 U. S. 95
domicile for purposes of the taxes to be imposed upon his
estate. But the suit in the nature of interpleader is not within
the original and exclusive jurisdiction of this Court, because it
is not a dispute between States. And the dispute between the
States, if indeed it is justiciable at all, is certainly not yet a
case or controversy within the constitutional meaning of that
term."
Id. at
437 U. S.
610-611. No material fact has changed since 1978. On the
premises of the Court's opinion, there still is no justiciable
controversy between Texas and California.
See California v.
Texas, post at
457 U. S. 170
(POWELL, J., dissenting). [
Footnote
2/5] There is, however, a ripe dispute about the estate's tax
liability to the two States -- a dispute of the kind for which
federal interpleader jurisdiction ought to be available.
II
In our 1978 decision in
California v. Texas, supra,
four Justice of this Court suggested that the administrator of the
Hughes estate might invoke the Federal Interpleader Act to protect
the estate from taxation based on inconsistent claim of domicile.
Contradicting the clear message conveyed by our decision in that
case, the Court today finds interpleader unavailable on the ground
that a suit against the state taxing official is barred by the
Eleventh Amendment.
Page 457 U. S. 96
The concurring opinions in
California v. Texas, supra,
all proposed that the administrator of the Hughes estate might
invoke the "fiction" of
Ex parte Young, 209 U.
S. 123 (1908), as interpreted in
Edelman v.
Jordan, 415 U. S. 651
(1974), to bring an interpleader action naming as defendants the
taxing officials of Texas and California. The Court today holds
otherwise. According to the Court, it is the lawful function of the
state officials to litigate Hughes' domicile. There is accordingly
no colorable claim that they are acting in excess of their
authority under state law; no constitutional violation is alleged;
and
Edelman v. Jordan is read narrowly to retain the
Eleventh Amendment bar to injunctive suits against state officials
not acting unlawfully, even in this case in which no money damages
are sought from the state treasury.
There can be no doubt that
Edelman will admit of a
broader construction. The plain language of that decision asserts
that the Eleventh Amendment bars only suits "by private parties
seeking to impose a liability which must be paid from public funds
in the state treasury,"
id. at
415 U. S. 663,
and not actions that may have
"fiscal consequences to state treasuries . . . [that are] the
necessary result of compliance with decrees which, by their terms,
[are] prospective in nature,"
id. at
415 U. S.
667-668. Thus, at least in a case such as this, in which
the very controversy is the result of our federal system, I
continue to believe that resort to federal interpleader is not
proscribed by the Eleventh Amendment as construed by
Edelman v.
Jordan.
In rejecting this interpretation of
Edelman, the Court
relies at the last on
Worcester County Trust Co. v. Riley,
302 U. S. 292
(1937). If this broader view of
Edelman "were to be the
law," the Court reasons, "
Worcester must, in major part,
be overruled."
Ante at
457 U. S. 91. In
light of
Edelman, however, it must be recognized that the
law has changed since 1937, and that the legal assumptions on which
Worcester County rested no longer are uniformly valid.
See California v. Texas, 437 U.S. at
427 U. S. 601
(BRENNAN, J., concurring). If
Worcester County cannot be
defended on the basis of its internal
Page 457 U. S. 97
logic and adherence to constitutional principles, this Court
should not be bound by it.
III
The Court today continues to reason from the premise, accepted
by
Worcester County, that multiple taxation on the basis
of domicile does not offend the Constitution -- even in a case in
which both of the taxing States concede that a person may have but
one domicile. [
Footnote 2/6] In my
view, this premise is wrong. As an alternative to the approach that
I embraced in
California v. Texas, I now would be prepared
to overrule
Worcester County on this point, and to hold
that multiple taxation on the basis of domicile -- at least insofar
as "domicile" is treated as indivisible, so that a person can be
the domiciliary of but one State -- is incompatible with the
structure of our federal system.
A
As Justice Stewart demonstrated in
California v. Texas,
the Court's conclusion in
Texas v. Florida, 306 U.
S. 398 (1939) -- that there was a controversy between
States, identifiable by analogy to a suit in the nature of
interpleader -- can be explained only by its concern for "the
plight of the estate, which was indeed confronted with a
substantial likelihood' of
Page 457 U. S.
98
multiple and inconsistent tax claims." 437 U.S. at
437 U. S. 606.
Yet this focus of concern found no justification in the principles
actually stated in Texas v. Florida, and it finds no
justification in the principles on which the Court rests today. If
the Constitution and laws provide no direct remedy to a decedent's
estate faced with multiple taxation on the basis of domicile, there
is no principled reason to protect the estate, before the fact,
against the bare possibility that multiple taxation may exhaust the
estate completely. See 437 U.S. at 437 U. S. 611.
[Footnote 2/7] In my view, however,
such taxation is not only unfair, but offensive to the Due Process
Clause of the Fourteenth Amendment.
B
Our decisions consistently have recognized that state taxation
must be rationally related to "
values connected with the taxing
state.'" Moorman Mfg. Co. v. Bair, 437 U.
S. 267, 437 U. S. 273
(1978), quoting Norfolk & Western R. Co. v. Missouri State
Tax Comm'n, 390 U. S. 317,
390 U. S. 325
(1968). As framed by Justice Frankfurter in Wisconsin v. J. C.
Penney Co., 311 U. S. 435,
311 U. S. 444
(1940):
"Th[e] test is whether property was taken without due process of
law, or, if paraphrase we must, whether the taxing power exerted by
the state bears fiscal relation to protection, opportunities and
benefits given by the state. The simple but controlling question is
whether the state has given anything for which it can ask
return."
Under these principles, tangible property generally may be taxed
only by the State where it is located.
Curry v. McCanless,
307 U. S. 357,
307 U. S. 364
(1939). [
Footnote 2/8] Physical
presence
Page 457 U. S. 99
also is required to justify a state succession tax on the
transfer of real property occasioned by the death of the owner.
Treichler v. Wisconsin, 338 U. S. 251
(1949);
Frick v. Pennsylvania, 268 U.
S. 473,
268 U. S. 492
(1925).
In contrast with real property, intangible personal property is
not physically located in any particular place, at least in any
simple sense. [
Footnote 2/9]
Moreover, there may be more than one State that has a significant
connection with intangible property -- for example, the State in
which a trust's assets are administered and the State in which the
trustee is domiciled.
See Curry v. McCanless, supra.
Recognizing these differences, this Court has upheld the multiple
taxation of intangible property. The decisions in which the Court
has done so have not, however, undermined the fundamental principle
that a State's levy of a tax must be connected rationally with the
values on which the tax is imposed or with protections that the
State has afforded.
In this case, both California and Texas -- as most States --
recognize that a person can have but one domicile. And it would
appear settled that domicile provides the only adequate basis for
taxation of intangible property in a decedent's estate, not located
in the State or otherwise dependent on the protection of its laws.
See Curry v. McCanless, supra, at
Page 457 U. S. 100
307 U. S.
365-366;
cf. Complete Auto Transit, Inc. v.
Brady, 430 U. S. 274,
430 U. S.
286-288 (1977) (defining Commerce Clause limits on state
taxation in terms of connections to and benefits conferred by the
taxing State). Here neither State alleges an entitlement to tax the
Hughes estate on any other basis. From these premises, it follows
that multiple taxation based solely on conflicting determinations
of domicile not only is unfair, but that taxation on this basis by
at least one of the States must lack the only predicate asserted to
justify its levy under the Due Process Clause. [
Footnote 2/10]
It is, of course, true that, in 1937,
Worcester County Trust
Co. v. Riley, 302 U. S. 292,
held that this admitted unfairness did not offend the Constitution.
But
Worcester County's holding on this point already has
been undermined not only by intervening decisions reiterating due
process limits on state taxation of intangible property,
see
Norfolk & Western R. Co. v. Missouri State Tax Comm'n,
supra, at
390 U. S.
323-326, and of income,
see, e.g., Mobil Oil Corp.
v. Commissioner of Taxes, 445 U. S. 425,
445 U. S.
436-442 (1980), but also by cases in which this Court
has recognized a fundamental right to travel.
See, e.g., Dunn
v. Blumstein, 405 U. S. 330
Page 457 U. S. 101
(1972);
Shapiro v. Thompson, 394 U.
S. 618 (1969). It is only by moving from State to State
that a taxpayer risks incurring multiple taxation based on
conflicting determinations of domicile. While no single State can
be charged with creating this risk, the fact of its existence
cannot be defended. The threat of multiple taxation based solely on
domicile simply is incompatible with the structural principles of a
federal system recognizing as "fundamental" a constitutional right
to travel.
C
By holding that multiple taxation based on domicile is
prohibited by the Due Process Clause, the Court could lay the basis
for resolution of disputes such as this one under the interpleader
jurisdiction of the federal district courts. By alleging that state
taxing officials threatened the estate with multiple liability, an
administrator would state a colorable claim that the relevant state
officers were acting outside of constitutional limits, and thus
that they were acting in their individual capacities under
Ex
parte Young, 209 U. S. 123
(1908). The Eleventh Amendment thus would not bar the suit under
Ex parte Young and
Edelman v. Jordan, and the
interpleader requirement of competing claimants would be
satisfied.
Professor Zechariah Chafee, the father of the federal
interpleader statute, argued:
"It is our federal system which creates the possibility of
double taxation. Somewhere within that federal system we should be
able to find remedies for the frictions which that system
creates."
Federal Interpleader Since the Act of 1936, 49 Yale L.J. 377,
388 (1940).
In my view, the Due Process Clause provides the right to be free
of multiple taxation of intangibles based on domicile. The Federal
Interpleader Act provides the remedy.
As the Court holds otherwise, I respectfully dissent.
[
Footnote 2/1]
28 U.S.C. § 1335.
[
Footnote 2/2]
Nevada imposes no estate tax, and therefore has not appeared as
a party.
[
Footnote 2/3]
As a result of this decision, the Hughes heirs apparently will
not suffer unfair double taxation. Other heirs of other estates
presumably will not be so fortunate.
[
Footnote 2/4]
JUSTICE BRENNAN also filed a concurring opinion tentatively
accepting Justice Stewart's conclusion and stating that he would
"deny California's motion, at least until such time as it is shown
that . . . a statutory interpleader action cannot or will not be
brought." 437 U.S. at
437 U. S. 601,
437 U. S. 602.
I too filed a concurring opinion.
Id. at
437 U. S.
615.
[
Footnote 2/5]
The Court's main ground for distinguishing the situation in 1978
from the situation today seems to be that "it seemed to several
Members of the Court [in 1978] that statutory interpleader might
obviate the need to exercise our original jurisdiction."
California v. Texas, post at
457 U. S. 168.
Yet this argument simply is unresponsive to the question whether
there is an actual case or controversy for which our original
jurisdiction properly can be invoked. The Court notes that "several
other uncertainties" have disappeared.
Post at
457 U. S. 169.
But its arguments are makeweights. Until the States have obtained
conflicting judgments in their own courts, there is no ripe
"dispute between two States as to the proper division of [the]
finite sum of money" comprising the Hughes estate.
California
v. Texas, 437 U. S. 601,
437 U. S. 610
(1978) (Stewart, J., concurring).
See post at
457 U. S. 170
(POWELL, J., dissenting).
[
Footnote 2/6]
Worcester County must be viewed in the context of a
constitutional history that is hardly one of settled consistency.
Only seven years before the Court decided
Worcester
County, in
Farmers Loan & Trust Co. v. Minnesota,
280 U. S. 204
(1930), this Court had overruled
Blackstone v. Miller,
188 U. S. 189
(1903), and held that the Due Process Clause forbids the multiple
taxation of intangibles. For a time,
Farmers Loan & Trust
Co. appeared to have established that only the single State of
a person's domicile could tax intangible property in a decedent's
estate.
See First National Bank v. Maine, 284 U.
S. 312 (1932). But the Court then reached the contrary
conclusion in
Worcester County, finding that inconsistent
state court adjudications of domicile and consequent assessment of
estate taxes did not violate the Due Process Clause.
First
National Bank v. Maine, supra, then squarely was overruled by
State Tax Comm'n v. Aldrich, 316 U.
S. 174,
316 U. S. 181
(1942), which held that multiple taxation of intangibles did not
per se offend the Constitution.
[
Footnote 2/7]
"If it is unfair to subject an estate to two domicile-based
taxes when all agree that it is possible to have only one domicile,
that unfairness is just as great, if not greater, when a decedent's
estate is able to pay the taxes to both States."
437 U.S. at
437 U. S.
611.
[
Footnote 2/8]
"When we speak of the jurisdiction to tax land or chattels as
being exclusively in the state where they are physically located,
we mean no more than that the benefit and protection of laws
enabling the owner to enjoy the fruits of his ownership . . . are
so narrowly restricted to the state in whose territory the property
is physically located as to set practical limits to taxation by
others. Other states have been said to be without jurisdiction and
so without constitutional power to tax tangibles if, because of
their location elsewhere, those states can afford no substantial
protection to the rights taxed. . . ."
307 U.S. at
307 U. S.
364.
[
Footnote 2/9]
See Curry v. McCanless, 307 U.
S. 357,
307 U. S.
365-366 (1939):
"Very different considerations, both theoretical and practical,
apply to the taxation of intangibles, that is, rights which are not
related to physical things. Such rights are but relationships
between persons, natural or corporate, which the law recognizes by
attaching to them certain sanctions enforceable in courts. The
power of government over them and the protection which it gives
them cannot be exerted through control of a physical thing. They
can be made effective only through control over and protection
afforded to those persons whose relationships are the origin of the
rights."
[
Footnote 2/10]
See Chafee, Federal Interpleader Since the Act of 1936,
49 Yale L.J. 377, 383-384 (1940) (footnotes omitted):
"[T]here are two types of double taxation. In one kind, the same
property or person is taxed in two states on two different
theories. . . . In the other kind of double taxation, a single
theory is applied in both states to tax the same person or
property, but the two state governments disagree on a vital issue
of fact. The
Worcester County Trust Co. case falls into
this class. Both states had the same law, that a death tax is
levied only at the decedent's domicile and that a man has only one
domicile. The only dispute was, where was that domicile?"
"It is rather surprising that almost all the attacks on double
taxation . . . have been directed at the first kind, because the
second kind seems more unjust. . . . [I]t is highly unfair for both
state governments to tell the taxpayer, 'You have to pay only one
tax,' and then make him pay twice. The injustice of the situation
is clearly brought out by the fact that the courts of each state
regard the other state as acting unlawfully, and yet neither state
gives the taxpayer any remedy."