The claim that section 2 of the act providing for the taxation
of life estates, as construed by the highest courts of the
Illinois, is in contravention of the Fourteenth Amendment in that
the classification of life tenants is arbitrary and unreasonable
and denies to life tenants the equal protection of laws because it
taxes one class of life estates where the remainder is to lineals
and expressly exempts life estates where the remainder is to
collaterals or to strangers in blood, cannot be sustained.
Inheritance tax laws are based upon the power of a state over
testate and intestate dispositions of property, to limit and create
estates, and to impose conditions upon their transfer or
devolution. This Court has already decided in regard to this law
that such power could be exercised by distinguishing between the
lineal and collateral relatives of a testator.
Page 188 U. S. 98
Whether the amount of the tax depends upon him who immediately
receives or upon him who ultimately receives makes no difference
with the power of the state. No discrimination being exercised in
the creation of the class, equality is observed.
Magoun v.
Illinois Trust and Savings Bank, 170 U.
S. 283, followed.
The case is stated in the opinion of the Court.
MR. JUSTICE McKENNA delivered the opinion of the Court.
The case presents the question of the constitutionality, under
the Fourteenth Amendment of the Constitution of the United States,
of section 2 of the inheritance tax law of the State of Illinois.
The constitutionality of the law was passed upon in
Magoun v.
Illinois Trust & Savings Bank, 170 U.
S. 283, and is there set out. As much of section 2 as is
necessary to quote is as follows:
Page 188 U. S. 99
"SEC. 2. When any person shall bequeath or devise any property
or interest therein or income therefrom to mother, father, husband,
wife, brother and sister, the widow of the son, or a lineal
descendant during the life or for a term of years, or [and]
remainder to the collateral heir of the decedent, or to the
stranger in blood, or to the body politic or corporate at their
decease, or on the expiration of such term, the said life estate or
estates for a term of years shall not be subject to any tax, and
the property so passing shall be appraised immediately after the
death at what was the fair market value thereof at the time of the
death of the decedent in the manner hereinafter provided, and after
deducting therefrom the value of said life estate, or term of
years, the tax transcribed by this act on the remainder shall be
immediately due and payable to the treasurer of the proper county,
and, together with the interests thereon, shall be and remain a
lien on said property until the same is paid. . . ."
It is claimed, however, that the question presented in this case
was not passed upon in
Magoun v. Illinois Trust & Savings
Bank. If this be not so, if this case cannot be distinguished
from that, it follows necessarily that the judgment sought to be
reviewed must be affirmed.
The proceedings originated in the County Court of Cook County,
Illinois, which entered a judgment order assessing taxes, under the
law in controversy, upon the property and estates passing to the
plaintiffs in error. The order was affirmed by the supreme court of
the state. 189 Ill. 472.
Albert M. Billings, a resident of Chicago, died in that city
February 7, 1897. He left surviving him a widow, Augusta S.
Billings; a son, Cornelius K. G. Billings, one of the plaintiffs in
error, and grandson Albert M. Billings Ruddock, who is the other
plaintiff in error. He also left a son by a former marriage, with
whom this record is not concerned. His estate was very large, and
he devised and bequeathed it all to his wife, excepting certain
reservations, during her natural life. How it should be divided
then the will proceeded to provide as follows:
"I do also herein give and bequeath to my son Cornelius
Page 188 U. S. 100
Kingsley Garrison Billings, and to my grandson Albert M.
Billings Ruddock, to be held and owned by them at the death of my
wife Augusta S. Billings as is hereinafter explained and set forth,
all the property and estate herein bequeathed to her my wife not
otherwise disposed of by my said executors hereinafter named, in
the manner following, to-wit: two-thirds thereof to my son C. K. G.
Billings and one third thereof to my grandson Albert M. Billings
Ruddock, to be held and owned by them as above stated during their
lifetime, and should my son C. K. G. Billings die, not leaving a
living child or children of his own issue, the property herein
bequeathed to him shall revert and be held and owned by my
grandchild Albert M. Billings Ruddock during his lifetime, and
should my grandson Albert M. Billings Ruddock die not leaving a
child or children of his own issue, then all the property and
estate herein bequeathed to him shall revert and become the
property and estate of my brother John D. Billings (should he be
alive at that time) and my living nephews and nieces who shall be
living at the time of the death of my said grandson, as aforesaid,
said brother, nieces, and nephews to share and share alike in said
estate."
The will therefore created a life estate in the widow in the
entire estate, and at her death life estates of two thirds and one
third of the property bequeathed respectively to the testator's son
and grandson, the plaintiffs in error.
The widow renounced the provision made for her, and elected to
take in lieu thereof her dower and legal share, and the estates to
the plaintiffs in error accrued at once. The county court appointed
an appraiser to fix the fair market value of the estates for the
purpose of assessing the inheritance tax as provided by the
statute. "The widow's dower award," to quote from the opinion of
the supreme court,
"and one-third of the personalty were appraised at the total sum
of $2,363,151.75, the tax upon which, after deducting the $20,000
exemption, was fixed at $23,443.53. The life interest (as it was
decreed to be) of said Cornelius in the two-thirds bequeathed to
him was appraised at $2,472,118.75, and, after deducting his
exemption of $20,000, the tax to be paid by him was assessed at
Page 188 U. S. 101
$24,821.18. This included the specific devise of real estate
valued at $30,000. The life interest of Albert M. Billings Ruddock
in the one-third interest bequeathed to him was appraised at
$1,408,374.77, and, after deducting his exemption of $20,000, his
tax was assessed at $14,043.74. This included also the tax on a
specific devise to him of real estate valued at $16,000. The court,
in approving the appraiser's report, found that Cornelius K. G.
Billings took a life estate in the two-thirds of the residuary
estate bequeathed to him, and that there was a remainder therein of
the value at the testator's death, or $864,584.70, which had not
vested, and that there was a remainder in the one-third bequeathed
to Albert M. Billings Ruddock for life of the value of $250,976.95,
which had not vested, and ordered that the tax on these remainders
be postponed until they shall have become vested."
The widow was an appellant in the supreme court of the state,
but she is not a party here.
The assignment of error is
"that the statute is in contravention of the Fourteenth
Amendment to the Constitution of the United States of America in
that the classification of life tenants is arbitrary and
unreasonable, and denies to the plaintiffs in error, as life
tenants, the equal protection of the laws because the statute, as
interpreted and enforced by the state courts, taxes life estates
where the remainder is to lineals, but does not tax, and expressly
exempts, similar life estates where the remainder is to collaterals
or to strangers in blood."
Turning to the
Magoun case, we find that the objection
made to the statute was that it denied to the appellant the equal
protection of the laws, and the somewhat elementary and lengthy
discussion in the opinion was induced by the grounds upon which,
and the ability with which, the statute was attacked. It is very
certain that no consideration was omitted from the arguments at bar
which could have aided the court to form a judgment. If there had
been a proper classification there could not have been the denial
of the equal protection of the laws, and we therefore expressed and
illustrated the principle upon which it should be based. We said it
was established by cases that classification must be based on some
reasonable ground.
Page 188 U. S. 102
It could not be a "mere arbitrary selection." But what is the
test of an arbitrary selection? It is difficult to exhibit it
precisely in a general rule. Classification is essentially the same
in law as it is in other departments of knowledge or practice. It
is the grouping of things in speculation or practice because they
"agree with one another in certain particulars and differ from
other things in those same particulars." Things may have very
diverse qualities, and yet be united in a class. They may have very
similar qualities, and yet be cast in different classes. Cattle and
horses may be considered in a class for some purposes. Their
difference are certainly pronounced. Salt and sugar may be
associated in a grocer's stock for a grocer's purposes. To confound
them in use would be very disappointing. Human beings are
essentially alike, yet some individuals may have attributes or
relations not possessed by others, which may constitute them a
class. But their classification -- indeed, all classification --
must primarily depend upon purpose -- the problem presented.
Science will have one purpose, business another, and legislation
still another. The latter, of course, on account of the restraints
upon the legislature, may not be legal -- may not be within the
power of the legislature. To dispute that power, however, is not
the same thing as to dispute a classification, and yet that there
may be dependence -- more freedom of classification in some
instances -- has been indicated by the cases. A state cannot
regulate interstate commerce, however accurate its classification
of objects may be. On the other hand, the taxing power of a state
is one of its most extensive powers. It cannot be exercised upon
persons grouped according to their complexions. It can be exercised
if they are grouped according to their occupations. A state may
regulate or suppress combinations to restrict the sale of products.
The power cannot be exerted to forbid combinations among those who
buy products, and permit combinations among those who raise or grow
products.
Connolly v. Union Sewer Pipe Co., 184 U.
S. 540. And yet, exercising its taxing power, it has
been decided, that a state may make that discrimination.
American sugar Refining Co. v. Louisiana, 179 U. S.
89. Other illustrations may be taken from the cases
which tend to the same end. If the
Page 188 U. S. 103
purpose is within the legal powers of the legislature, and the
classification made has relation to that purpose (excludes no
persons or objects that are affected by the purpose, includes all
that are), logically speaking, it will be appropriate; legally
speaking, a law based upon it will have equality of operation. And,
excluding our right to consider policies or assume legislation, we
have many times said that a state in its purposes and in the
execution of them must be allowed a wide range of discretion, and
that this Court will not make itself a harbor in which can be found
"a refuge from ill advised, unequal, and oppressive" legislation.
Mobile Co. v. Kimball, 102 U. S. 691.
These principles were announced in the
Magoun case, and
found to sustain the Illinois statute. We said,
"There are three main classes in the Illinois statute, the first
and second being based, respectively, on lineal and collateral
relationship to the testator or intestate, and the third being
composed of strangers to his blood and distant relatives. The
latter is again divided into four subclasses, dependent upon the
amount of the estate received. The first two classes therefore
depend upon substantial differences, differences which may
distinguish them from each other, and them or either of them from
the other class -- differences, therefore, which 'bear a just and
proper relation to the attempted classification' -- the rule
expressed in
Gulf, Colorado & Santa Fe Railway Co. v.
Ellis, 165 U. S. 150. And if the
constituents of each class are affected alike, the rule of equality
prescribed by the cases is satisfied. In other words, the law
operates 'equally and uniformly upon all persons in similar
circumstances.'"
But it is insisted that the classification sustained in the
Magoun case "related solely to the graduated feature of
the tax." In the case at bar, it is said, the question is
"whether or not the Illinois legislature can discriminate
against constituents of a certain class, and apply different rules
for the taxation of its members. Life tenants constitute but a
single class, and the incidents of such an estate, the source
thereof, the extent, the dominion over and quality of interest in
the tenant, is the same irrespective of the ultimate vesting of the
remainder. The tax
Page 188 U. S. 104
is not upon the property, but is upon the person succeeding to
the property."
Undoubtedly life tenants, regarded simply as persons, may be in
legal contemplation the same; estates for life, regarded simply as
estates with their attributes also in legal contemplation, may be
said to be the same, but that is not all that is to be considered,
nor is it determinative. We must regard the power of the state over
testate and intestate dispositions of property, its power to create
and limit estates, and, as resulting, its power to impose
conditions upon their transfer or devolution. It is upon this power
that inheritance tax laws are based, and we said, in the
Magoun case, that the power could be exercised by
distinguishing between the lineal and collateral relatives of a
testator. There, the amount of tax depended upon him who
immediately received; here, the existence of the tax depends upon
him who ultimately receives. That can make no difference with the
power of the state. No discrimination being exercised in the
creation of the class, equality is observed. Crossing the lines of
the classes created by the statute, discriminations may be
exhibited, but within the classes there is equality.
Judgment affirmed.