Jurisdictional Statement — Board of Regents of the University of Wisconsin v. Illinois

INDEX

Sussect Inpex

Statement as to jurisdiction |

Statutory provisions believed to sustain juris-

diction

The statute of the State the validity ‘of the

application of which is involved

The date of the judgment and the — for

appeal

Nature of the case and rulings below.

Cases believed to sustain jurisdiction

Appendix ‘‘A’’—Opinion of the fie iy spare Court of

Illinois

TasLe or Cases CITED

Board of Directors of Chicago Theological Seminary

v. People, 189 Ill. 439, 188 U. 8. 662

Connecticut v. Massachusetts, 282 U. S. 660

Georgia v. Tenn. Copper Co., 206 U. S. 230.

Johnson, In re Estate of, 389 Ill. 425

Kansas v. Colorado, 185 U. 8. 125

Missouri v. Illinois, 180 U. S. 208

New York v. New Jersey, 256 U.S. 296

People v. Drainage Commissioners, 283 Ll. 514

People v. Moses, 363 Ill. 423

People v. Strom, 363 Tll. 241

People v. Tombaugh, 303 Ill. 591

People v. Varal, 351 Ill. 96

People v. Young, 309 Ill. 27

Prentiss v. Eisner, 260 Fed. 589

State of Missouri v. State of Illinois, 200 U.S. 496.

State of Rhode Island v. Commonwealth — Massachu-

setts, 12 Peters 657. | —

U.S. v. Perkins, 163 U. 8S. 625

Wisconsin v. Illinois, 278 U. S. 367

Wyoming v. Colorado, 259 U. 8. 419...

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ii INDEX

Statutes CiTep

P.

Constitution of the State of Illinois, Article VI: ™

Section1.... eS PR ge na weeks | D)

TE snap chats: . 9

Iilinois Revised Bicrald 1943, Ch. 120, See. 375-

ee ae ee en elie 6 ea oh, . 2347

Laws of Illinois of 1895, p. 901..... 7

Revised Statutes of Illinois, Chapter 37, Sec. 18 2

United States Code, Title 28:

re 4 1

RLY ol, ii 8a 5 alg 0 9-00 9B 8d kB 1

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SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1949

No. 544

THE BOARD OF REGENTS OF THE UNIVERSITY

OF WISCONSIN AND THE STATE OF WISCONSIN,

Appellants,

vs.

THE STATE OF ILLINOIS

APPEAL FROM THE SUPREME COURT OF THE STATE OF ILLINOIS

STATEMENT AS TO JURISDICTION

Appellants submit the following statement of the basis

on which it is contended the Supreme Court of the United

States has jurisdiction to reverse, on appeal, the judgment

of the Supreme Court of the State of Illinois.

A

Statutory Provisions Believed to Sustain Jurisdiction

The jurisdiction of the Supreme Court of the United

States is invoked under Sections 1257(2) and 1251(a) (1)

of the U. S. Code (Title 28 U. S. C.).

2

The judgment of the Supreme Court of the State of

Illinois, the highest Court of that state, is a final judg.

ment in this suit under Article VI, Sections 1 and 2 of the

Constitution of the State of Illinois and Section 18 of

Chapter 37 of the Revised Statutes of the State of IIli-

nois and as construed and applied in the following cases:

People v. Young, 309 Ill. 27 (1923); People v. Drainage

Commissioners, 283 Ill. 514 (1918); and Board of Directors

of Chicago Theological Seminary v. People, 189 Ill. 439

(1901) (Aff’d 188 U. S. 662).

B

The Statute of the State, the Validity of the Application

of Which Is Involved

The title and pertinent portions of the statute in ques-

tion as found in Jl. Rev. Stats., 1943, Ch. 120, Sec. 375 read

as follows:

‘*Aw Act to tax gifts, legacies, inheritances, transfers,

appointments and interest in certain cases and to

provide for the collection of the same and repealing

certain acts therein named. (Approved June 14,

1909, L. 1909, p. 311).

375. Property subject—Exceptions—Rates See. 1. A

tax shall be and is hereby imposed upon the transfer

of any property, real, personal, or mixed, or of any

interest therein or income therefrom, in trust or other-

wise, to persons, institutions or corporations, not here-

inafter exempted, * * *’’.

C

The Date of the Judgment and the Application for Appeal

The decree and judgment sought to be reversed was

entered in the Supreme Court of Illinois on the 22nd day

of September, 1949.

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The petition for appeal, assignment of errors and prayer

for reversal was presented to the Chief Justice of the

Supreme Court of the State of Illinois on the 16th day of

December, 1949, and the order allowing said appeal was

executed and the appeal cost bond approved on the 16th

day of December, 1949.

3

D

Nature of the Case and Rulings Below

This appeal is brought to reverse an assessment of in-

heritance taxes, under the Illinois Inheritance Tax Act,

upon a gift which was found by the Trial Court to be a

gift to the State of Wisconsin.

Appellants contend that the action of the State of Illinois

in taxing a gift to the State of Wisconsin violates the

Constitution of the United States and the fundamental

sovereignty of the State of Wisconsin.

Kemper K. Knapp, a resident of the State of Illinois,

died testate on February 23, 1944. In his will he made a

gift of the residue of his estate to ‘‘The Board of Regents

of the University of Wisconsin’’. The residue was valued

at the date of his death at $2,471,758.49. To the inheri-

tance tax return, which the executors of the estate filed, a

protest by Plaintiffs herein was appended protesting any

assessment of inheritance taxes on said residue. The

subject of this protest was argued at length before the

County Judge of Cook Courty, Illinois, after which he

made an assessment of inheritance taxes of $714,097.55.

From that assessment order an appeal was taken to the

County Court of Cook County, Illinois, where it was affirmed

by an order assessing the tax on the passing of the gift

to ‘‘The Board of Regents of the University of Wisconsin.’’

The hearing before the County Court was on oral argu-

ment and a stipulation of the parties—-one of the matters

a

of law and of fact stipuiated being that ‘‘The Board of

Regents of the University of Wisconsin is the State of

Wisconsin’. At said hearing the Plaintiffs urged that to

apply the Illinois Inheritance Tax Act to the State of Wis-

consin would be an unconstitutional application of said

Act. The part of that Act which is here relevant (ill. Rey.

Stats. 1943, Ch. 120, See. 375-403) is quoted in Section ““B”

of this ‘‘ Statement as to Jurisdiction’’.

In entering its order affirming the assessment of inheri-

tance taxes, the County Court of Cook County, Illinois,

included therein the following findings, among others:

**(1) The Board of Regents of the University of

Wisconsin is the State of Wisconsin for all purposes

relevant to this case.

(2) The Board of Regents of the University of Wis-

consin is an instrumentality and arm of the State of

Wisconsin.

+

(3) The gift here assessed was in substance a gift to

the State of Wisconsin.’’

Subsequent to the aforesaid order affirming the assess-

ment of tax, Plaintiffs appealed to the Supreme Court of

Illinois where briefs were submitted by the parties and

the cause was orally argued. The Supreme Court of the

State of Illinois, the Court of last resort in the State, on

September 22, 1949, affirmed the order of assessment with-

out giving effect in its opinion to the express finding of

the Trial Court that ‘‘The Board of Regents of the Uni-

versity of Wisconsin is the State of Wisconsin for all pur-

poses relevant to this case’’. The Supreme Court of the

State of Illinois did not give effect to the two chief consid-

erations presented by the Appellants, to-wit: (1) a state

cannot tax a sister state; and (2) if the Illinois statute

is construed to uphold a tax on a sister state, it is uncon-

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stitutional under the Constitution of the United States.

The failure of the Supreme Court of Illinois to heed said

express finding of the Trial Court, and its failure to give

effect in its opinion to the two chief matters presented,

as aforesaid, wax called to its attention in a Petition for

Rehearing filed by the Appellants. A rehearing was denied

without opinion on November 21, 1949.

The law in Illinois, 2s many times enunciated by the

Supreme Court of the State of Illinois, is and always has

been that the Illinois inheritance tax is a tax on the right

of a recipient to receive property from a decedent, as dis-

tinguished from a statute which imposes a tax on the right

of a decedent to transmit his property. Illinois’ Supreme

Court decisions have been consistent in this matter and

are illustrated among others by the following cases:

People v. Strom, 363 Ill. 241 (1936) ;

In re Estate of Johnson, 389 Ill. 425, 428 (1945) ;

People v. Moses, 363 Ill. 423 (1936) ;

People v. Varel, 351 Ill. 96 (1932) ;

People v. Tombaugh, 303 Ill. 591 (1922).

5

The tax in the instant case was levied upon the State of

Wisconsin, because ‘‘The Board of Regents of the Uni-

versity of Wisconsin’ is the State of Wisconsin. That said

The Board of Regents is the State of Wisconsin as a matter

of fact and as a matter of law was the considered opinion

of the parties to this action and was so stipulated. More-

over, such was specifically found by the County Court in

its findings that ‘‘The Board of Regents of the University

of Wisconsin is the State of Wisconsin for all purposes

relevant to this case.’’ The County Court, overlooking

the fact that the recipient, under the will of the decedent,

is ‘‘The Board of Regents of the University of Wisconsin’’

and is, by way of stipulation, the State of Wisconsin, made

6

the following irrelevant findings respecting the University

of Wisconsin:

(4) The General Assembly of the State of Illinois,

by the Inheritance Tax Act as it stood at the time of

the death of Kemper K. Knapp, clearly evinced its

intention to tax gifts to State universities, of states

other than Illinois, including the University of Wis-

consin.

(5) The University of Wisconsin is within the pur-

view of the taxing provisions of the Lllinois Inheri-

tance Tax Act imposing a tax upon ‘‘persons, institu-

tions or corporations.’’

(6) The Act does not expressly or by implication

exempt the University of Wisconsin from the tax.

(7) The tax as thus imposed upon the University of

Wisconsin does not violate any provision of the Con-

stitution of the State of Illinois, any provision of the

Constitution of the United States or any immunity of

the State of Wisconsin.

Since the parties stipulated that the gift here assessed

was made to the State of Wisconsin, and the County Court

expressly so found, there is no relevance or materiality

in findings respecting the University. ‘‘The Board of

Regents of the University of Wisconsin’’ is an arm of

the State. As found and stipulated, it is the State.

The Supreme Court of the State of Illinois likewise based

its decision on matters irrelevant when it opined that the

statute as here applied was valid because the gift was made

to The Board of Regents and because it considered that

the Board is within the words of the statute ‘‘corpora-

tion’’ and ‘‘institution’’. This can be so only in the same

broad, loose sense that a State is an institution or cor-

poration. If the Illinois Courts’ view is correct, can any

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untaxable gift be made to a State, if the subsequent dispo-

sition of it by the State is to be pursued? The State of

Wisconsin is not a corporation as the word is used in the

Illinois Act. The language of an immediately prior Illinois

Inheritance Tax Act (Laws of 1895, page 301) ‘‘to any

person, or persons, or to any body politic or corporate’’

was changed by the legislature in the present Act (Ill.

Rev. Stats., 1943, Ch. 120, See. 375) to read ‘‘to persons,

institutions, or corporations’’, and in the present Act

whenever a state is intended, the unambiguous word ‘‘state’’

is used. The Wisconsin statute designating The Board

of Regents as a ‘‘body corporate’’, but not giving cor-

porate powers to the Board, is irrelevant and was properly

so considered by the parties to this cause, neither of whom

mentioned it in the briefs or on oral argument, yet the

Illinois Court considered it controlling.

The Supreme Court of the State of Illinois also upheld

the validity of the Illinois Inheritance Tax Act by erron-

eously applying the doctrine of the case of U. S. v. Perkins,

163 U. S. 625 (1895). As pointed out by the Appellants on

numerous occasions, in briefs and oral arguments in the

instant cause, that case was not in point because it arose

under a New York inheritance tax act which had been

repeatedly construed as imposing a tax on the right to

transmit property at death—it was not a tax on the right

to receive as is the situation in Illinois. This fundamental

difference in the two taxing statutes clearly appears from

the opinion in the Perkins case and is well set forth by

Judge Augustus Hand in the case of Prentiss v. Eisner,

260 Fed. 589 (D. C., S. D. N. Y., 1919). In referring to

the Perkins case, he said at p. 591:

‘‘The Supreme Court held that the New York trans-

fer tax was upon the testator’s right to dispose of his

property, and thus sustained the tax for, if it had been

8

treated as upon any right of succession of the United

States, the tax could not have been lawfully imposed.”

(Italics supplied.)

In spite of its repeated assertions that the Illinois In-

heritance Tax is one upon the right to receive, the Illinois

Supreme Court ignores the difference between such a tax

and the succession tax—a tax upon the right to transmit—

involved in the Perkins case. The Supreme Court of IIli-

nois in this case has mis-applied the doctrine of the Perkins

case by saying that the Illinois tax ‘‘is extracted from the

legacy before it passes’’ and ‘‘the legacy passes only after

diminution in the amount of the tax’’. The Illinois Act

expressly provides that the tax shall arise upon a ‘‘trans-

fer’’ and the tax is measured by the amount ‘‘of each

individual transfer’’. While in Illinois the obligation of

the donee to pay the tax arises with the ‘‘transfer’’, the

tax is predicated upon the entire transfer; and it is the

entire gift prior to ‘‘any diminution in the amount of the

tax’’, upon which the tax, if any, must be computed.

The foregoing demonstrates that the Supreme Court of

Illinois has unconstitutionally affirmed an assessment of

inheritance taxes made on the passing of property to the

State of Wisconsin and in so doing it overlooked its own

consistent holdings that the Illinois inheritance tax is

a tax on the right of a recipient to receive property.

EK

Cases Believed to Sustain Jurisdiction

The following decisions of the Supreme Court of the

United States are believed to sustain jurisdiction of this

appeal:

Kansas v. Colorado, 185 U.S. 125 (1902) ;

State of Missouri v. State of Illinois, 200 U. S. 496

(1906) ;

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State of Rhode Island v. Commonwealth of Massa-

chusetts, 12 Peters (37 U. 8.) 657 (1838) ;

Connecticut v. Massachusetts, 282 U. 8. 660 (1931) ;

New York v. New Jersey, 256 U. 8. 296 (1921) ;

Wisconsin v. Illinois, 278 U. 8S. 367 (1926) ;

Missouri v. Illinois, 180 U. S. 208 (1901) ;

Georgia v. Tenn. Copper Co., 206 U.S. 230 (1907) ;

Wyoming v. Colorado, 259 U. S. 419 (1922).

It is respectfully submitted that the Supreme Court of

the United States has jurisdiction of this appeal by virtue

of Sections 1257(2) and 1251(a)(1) of the U. S. Code as

enacted by the 80th Congress (which became effective

September 1, 1948) and that the inquiry, then, is whether

Section 1 of the Illinois Inheritance Tax Act, being Chap-

ter 120, Section 375 of the Illinois Revised Statutes, 1943,

is constitutional as applied and enforced in respect of

the instant case.

Respectfully submitted,

(S.) THomas E. Faimcutzp,

(S.) Georce I. Harcnt,

Attorneys for Appellants.

(S.) Warren H. Resu,

(S.) Cuas. H. Lercu,

Of Counsel for Appellants.

10

APPENDIX “A”

Docket No. 31104—Agenda 31—May, 1949

Tue Boarp or Recents or tHe University or Wisconsty,

et al., Appellants

v.

Tue Strate or Iti1xots, Appellee

Mr. Chief Justice Thompson delivered the opinion of the

Court:

This is an appeal from the county court of Cook

County, which affirmed an assessment of inheritance taxes

made by the county judge of said county upon the passing

by will of the residue of the estate of one Kemper K.

Knapp, deceased, who died testate, a resident of Cook

County, on February 23, 1944. The executors of the will

filed an inheritance tax return on February 17, 1945, to

which return was appended a written protest to the assess-

ment of any tax which might be levied in respect to the

passing of the residue of said decedent's estate. The residue

amounted to $2,471,758.49, and was, by the eighth clause of

the will, given to the Board of Regents of the University

of Wisconsin.

On a hearing before the county judge an order was en-

tered assessing inheritance taxes of $714,097.55. Objee-

tions were filed to the assessment and on a hearing in the

county court of Cook County, the facts being stipulated,

the court found that the Board of Regents of the Univer-

sity of Wisconsin in the State of Wisconsin for all purposes

relevant to this case; that the gift was, in substance, a gift

to the State of Wisconsin; that the University of Wisconsin

is within the purview of the taxing provisions of the Illinois

Inheritance Tax Act imposing a tax upon persons, institu-

tions or corporations (Ill. Rev. Stat. 1943, chap. 120, par.

375 et seq.) and entered an order confirming the assess-

ment of the tax. This cause is now before us on direct

appeal, the revenue of the State being involved.

It is the contention of appellants (1) that the act does

not provide for a tax upon a bequest to a State and there-

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fore does not cover the bequest here involved; (2) that

the assessment in question is unconstitutional; and (3)

that the Illinois Inheritance Tax Act cannot be applied

against a sovereign State of the United States.

Appellants urge the questions before the court are:

First: Does the Illinois Inheritance Tax Act by its terms

provide for a tax upon a bequest to a sister State? Appel-

lants contend that the State of Wisconsin is not a ‘‘person”’

or an “‘institution’’ or a ‘‘corporation’’ within the mean-

ing of the act. Second: Can the Illinois Inheritance Tax

Act constitutionally provide for a tax on a sister State?

Appellants contend that as a sovereign the State of Wis-

consin cannot be taxed by the State of Illinois. This, of

course, presents for determination the question of whether

or not the bequest here was one to a ‘‘person,”’ ‘*institu-

tion,” or ‘‘corporation,’’ within the meaning of the Illinois

Inheritance Tax Act, and whether or not Illinois can im-

pose her inheritance tax on a bequest to the Board of Re-

gents of the University of Wisconsin.

Appellants contend the Illinois act has no application

to the instant bequest, citing the following language of

the act: ‘A tax shall be and is hereby imposed upon the

transfer * * * to persons, institutions or corporations,

not hereinafter exempted, * * *.’’ (Ill. Rev. Stat. 1943,

chap. 120, par. 375.) Appellants waive and renounce any

rights to exemption under the act and rely solely on

the proposition that the act has no application whatever.

They rely on the well-settled rule that in construing stat-

utes words must be given their common accepted mean-

ing and the courts may not extend the clear meaning ex-

pressed in the terms of the statute. They point to the

absence of the word ‘‘State’’ in the pertinent section of

the statute quoted above and contend that because the

legislature did not use the word ‘‘State’’ in other sections

of the act, its absence in the taxing section must be taken

as excluding Wisconsin from the purview of the act.

We are unable to grasp the importance of this conten-

tion in view of the act and the bequest, which, in part, reads

as follows: ‘‘I direct my executor and my trustee to pay

and turn over to the Board of Regents of the University of

12

Wisconsin all the rest, residue and remainder of my estate.’’

That the legatee named is » corporation is not only un-

disputed, but is expressly so declared by the statute of

Wisconsin, which provides: ‘‘The Board of Regents and

their successors in office shall constitute a body corporate

by the name of the ‘Regents of the University of Wis-

consin’.’’ That the named legatee is also an instrumentality

of Wisconsin forms the only basis of appellants’ conten-

tion, but this in no way restricts the plain language of

the statute of Wisconsin which created the corporate en-

tity nor lessens the import of the plain language of the

bequest which directed the payment of the residue to be

made to the Board of Regents of the University of Wis-

consin.

It is appellee’s position that a corporation is not ex-

cluded from the application of the act by virtue of its

being an instrumentality of a State, and counsel cite the

case of People v. Richardson, 269 Ill. 275. In the Richard-

son case a tax was assessed on an escheat to an Illinois

county, and the county resisted on the ground that public

corporations were not within the act. We held in that

ease the term ‘‘corporation’’, as used in the Inheritance

Tax Act, was broad enough to include municipal corpora-

tions of every character and that the act applied to every

corporation not afterwards exempted in said act.

Appellants seek to differentiate this case on the ground

that the county was a corporation, but that Wisconsin was

not. We find here a close analogy between an escheat to

a county which, incidentally, is an arm of the State and

the bequest in the instant case to the Board of Regents

which is also, incidentally, an arm of the State of Wisconsin.

Further, in view of the amendment of the act in 1939,

(Til. Rev. Stat. 1939, chap. 120, par. 401) which specifically

exempted the State of Illinois and its political and cor-

porate instrumentalities from the proper operation of

the act, it would seem that appellants’ contention as to

the absence of the word ‘‘State’’ from section 1 of the act

is not founded on a sound basis. This legislation presents

a clear inference that the State and its instrumentalities

are included in the act unless specifically exempted. We

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find further support in the case of United States v. Perkins,

163, U. S. 625, 16 Sup. Ct. Rep. 1073, which holds the United

States is within the word ‘‘corporation’’ as used in the

New York act imposing an inheritance tax upon ‘‘persons’’

or “‘corporations’’ not exempt by law from taxation. From

what we have above pointed out it is apparent that the act

applies to the State of Wisconsin or its instrumentalities.

We are next confronted with the controlling question as

to whether the Illinois act is constitutional as applied to

the legacy here. It is the contention of appellants that

the act is unconstitutional for the reason that Illinois

may not impose legislation upon Wisconsin as applied to

this legacy, that Wisconsin is a sovereign State and that

Illinois cannot, as against her, impose restrictive legisla-

tion. That this is correct as an abstract proposition of

law is amply supported by the authorities cited. Kansas

y. Colorado, 206 U. S. 46, 27 Sup. Ct. 655.) As applied to

the instant contention, however, the only question seems

to be whether the Illinois Inheritance Tax Act, as applied

to the gift in question, violates those principles.

Appellants first assert that the Illinois act levies a tax

upon the right to receive and not on the property itself.

That is the well-settled rule in this State. (In re Estate of

Johnson, 389 Ill. 425; People v. Moses, 363 Ill. 423; People

v. Estate of Strom, 363 Ill. 241; People v. Varel, 351 Til.

96; People v. Tombaugh, 303 Ill. 591.) Appellants then con-

tend that the right to receive the legacy in question arises

from the sovereignty of Wisconsin and the right as given

to the Board of Regents of the University of Wisconsin by

the statutes of that State is a soveveigu right on which

Illinois may not impose her lecislation. No cases are

cited on that point, but we f".4 the decisions are to the con-

trary. In Kochersper” + v. Drake, 167 Il. 122, this court

said: ‘‘The laws of descent and the right to devise and

take under a will within the State of Illinois owe their

existence to the statute law of the State.’’ To this same

effect are National Safe Deposit Co. vy. Stead, 250 Til. 584,

and People v. Estate of Strom, 363 Ill. 241. We further

find the Federal decisions are in accord. In Mager v.

Grima, 49 U. 8. 487, 489, in discussing a State tax on legacies

a

14

to aliens, the court said, ‘‘ Now, the law in question is noth-

ing more than an exercise of the power which every State

and sovereignty possesses, of regulating the manner and

term upon which property real or personal within its domin-.

ion may be transmitted by last will and testament, or by

inheritance; and of prescribing who shall and who shall

not be capable of taking it. * * * and if a State may

deny the privilege altogether, it follows that, when it

grants it, it may annex to the grant any conditions which

it supposes to be required by its interests or policy.’’ In

harmony with tis decision are Plummer v. Coler, 178 U. §.

115, 20 S. Ct. 829, United States v. Perkins, 163 U. 8. 625,

16 Sup. Ct. 1073, United States v. Fox, 94 U.S. 315. These

decisions would seem to fix Wisconsin’s right to receive the

present legacy as a creature of and arising from the stat-

utes of Illinois as against the claim that such right arises

from Wisconsin’s sovereignty. This court has held that the

State has a vested financial right in the estate of every

decedent in this State which is subject to the payment of

an inheritance tax, and such right is equal in degree to

that of the personal representative, the heir or devisee

of the decedent, and it vests at the same time that the

inerest of the persona! representative, heir or devisee

vests. (National Safe Deposit Co. v. Stead, 250 Tll. 584.)

Further, in the case of Northern Trust Co. v. Buck & Rayner,

263 Ill. 222, this court said, ‘‘That portion of the estate

which under the Inheritance Tax law vests in the State by

mere operation of law becomes severed from the remainder

of the estate and cannot pass either by descent or devise.’

In view of these decisions, the charge of the act can rea-

sonably be said to be one against the donee only in that it

incidentally operates to reduce his share. This would not

seem to impose a direct burden on the donee or the State

of Wisconsin. We are of the opinion that such rights as

Wisconsin and its Board of Regents take in the legacy in

question arise from and are created by the statutes of

Illinois.

It is apparent after reading the many cases cited for the

appellants and appellee that great reliance is placed by

appellee on the Perkins case, above cited where the State

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of New York assessed an inheritance tax on a legacy to the

United States, and there a question analogous to the instant

one arose in the language of the court, ‘‘whether it is within

the power of the State to tax bequests to the United States.’’

The court held that the tax there was not against the prop-

ery itself, but upon the power of the testator to bequeath

his property and therefore was lawful in the case of a

legacy to the United States. The holding was grounded

on the theory that the legacy became the property of the

United States only after diminution in the amount of the

tax ‘‘and it is only upon that condition that the legislature

assents to a bequest of it.’ For that reason it was held

not objectionable as a tax upon the property of the United

States. In the present case, as disclosed by the Llinois

cases (National Safe Deposit Co, v. Stead, 350 Ill. 584, and

Northern Trust Co. v. Buck & Rayner, 263 Ill. 222), the

legacy passes only after diminution in the amount of the

tax. The tax here under the rationale of these cases is

not on the property of Wisconsin and is within the doctrine

of the Perkins case.

Appellee cites the case of Plummer v. Coler, 178 U. 8.

115, 20 S. Ct. 829, where an inheritance tax was assessed

against a legacy containing United States government bonds,

which were, by Federal statute, exempt from taxation. The

court upheld the assessment, and, in discussing the Perkins

ease, said, ‘‘One of the propositions recognized in that

case applicable to the present one is that a state tax that

would be invalid if imposed directly on a legacy to the

United States, may be valid if the amount of the tax is

taken out of the legacy before it reaches the hands of the

government—the theory of such a view apparently being

that the property rights of the government do not attach

until after the tax has been paid, or until the condition im-

posed by the tax law of the state has been complied with.’’

From this language the appellants seek to infer that a tax

like that of Illinois on the right to receive would be invalid

as applied to a legacy to a sovereign State. Appellants

point out that the tax in the Plummer case again was on

the right to transmit, not on the right to receive. It is

apparent the controlling consideration in the Plummer case

15

a

16

as in the Perkins case, was whether the tax was applied

to property in the hands of the government, and that the

theory of the application of the tax was of no controlling

importance. The Plummer case seems to support the as.

sessment in the instant case under the Illinois act as inter.

preted by this court.

We find considerable discussion as to the holding in the

case of Snyder v. Bettman, 190 U. 8S. 249, 23 S. Ct. 803,

where the pertinent question was whether the Federal]

government had power to impose a succession tax on a

legacy to a municipal corporation of a State which, although

factually converse, is closely analogous to the question pre-

sented here. In the Snyder case it was conceded that the

Federal government had no power to regulate the devalu-

ation of property and the power to impose the tax was found

in the general taxing powers of the Federal government,

Upon the question of the power of the United States to

tax a bequest to a State or one of its municipal corpora-

tions, the court said: ‘‘Conceding fully that congress has

no power to impose a burden upon a state or its municipal

corporations, the question in each case is whether the

tax is direct or incidental; since we have had frequent

occasion to hold that the imposition of a tax may indirectly

affect the value of property to the amount of the tax with-

out being legally objectionable as a direct burden upon

such property.’’ And the court in this case, saying ‘‘Hav-

ing determined, then, that Congress has the power to tax

successions; that the states have the same power, * * *

and that the exercise of that power in neither case con-

flicts with the proposition that neither the Federal nor the

state government can tax the property or the agencies of

the other, since, as repeatedly held, the taxes imposed are

not upon property, but upon the right to succeed to prop-

erty,’’ then upheld the tax on the ground that it was ex-

tracted from the property in the hands of the executor and

was not objectionable as a tax upon a municipality, even

though it operated incidentally to reduce the bequest.

Appellants seek to differentiate on the ground that the

tax there operated on the property of the testator, not the

donee, and that the act there required the executor to pay

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the tax before distribution. Such a differentiation cannot

be reconciled with the holdings of this court that under

the Illinois act the tax vests in the State and is severed at

the moment of the testator’s death, and in view of the strict

requirements of the Illinois act that the executor pay the

tax before distribution. Ill. Rev. Stat. 1947, chap. 120,

pars. 378, 379.

After a careful analysis of the many cases cited and the

provisions of the statute involved herein, the rule seems

to be settled that the right to receive an Illinois legacy is

a creature of the State of Illinois; that the State’s right

to the amount of the tax vests at the moment of the death

of decedent and is equal to that of legatees; that the tax

is extracted from the legacy before it passes and there-

fore the tax as assessed here is not a direct burden upon

the Board of Regents of the University of Wisconsin or

upon Wisconsin, even though it incidentally reduces the

legacy.

We are of the opinion that the instant case is within

the test announced in the Perkins case and approved in

the Plummer and Snyder cases, and that the tax was prop-

erly assessed. In accordance with our views as herein-

above expressed, the judgment of the county court of Cook

County is affirmed.

Judgment affirmed.