as imposed under the laws of New York.120 The treaty provides that: "In all states of the Union whose existing laws permit it, so long as, and to the same extent as, the said laws shall remain in force, Frenchmen shall enjoy the right of possessing personal and real property by the same title and in the same manner as the citizens of the United States. They shall be free to dispose of it as they may please, either gratuitously, or for value received, by donation, testament, or otherwise, just as those citizens themselves; and in no case shall they be subject to taxes on transfer, inheritance, or any others, different from those paid by the latter, or to taxes which shall not be equally imposed."

§ 27. Government Bonds and State Securities.

Perhaps one of the best illustrations of the exact nature of this tax, as being one that is imposed upon the privilege of succeeding to property, and not upon the property per se, which is merely used as a medium for ascertaining the value so as to fix the amount of the tax,1 121 is that of government bonds and state stocks, or securities declared by general laws to be exempt from all taxation. These securities have

been, nevertheless, subjected to the collateral inheritance tax.

122

120 In re Bondon, N. Y. Law J. March 1, 1892.

* * *

121 Wallace v. Myers, 38 Fed. 184. In re Swift, 137 N. Y. 77, 32 N. E. 1096. "In view of the federal decisions fixing the status of this form of taxation, it seems absurd to regard succession charges as property taxes. It is upon the idea that the tax is the price paid for the privilege of succession that its constitutionality has been upheld when applied to the transmission of United States securities." 32 Am. Law Reg. (N. S.) 366.

122 In re Carver's Estate (1893) 4 Misc. Rep. 592, 25 N. Y. Supp. 991; In re Tuigg's Estate (Surr.) 15 N. Y. Supp. 548; In re Ludlow's Estate (Surr.) 25 N. Y. Supp. 989. The statute of West Virginia (Laws 1887, p. 111, c. 31) expressly taxes all public securities for money of every

One of the earliest cases upon this subject is that of Strode v. Com.,123 where the state sought to collect a collateral tax upon an estate, a part of which was composed of government bonds devised to collaterals; and the right of the state to collect the tax upon the value of these bonds was upheld upon the familiar grounds stated above, and within the ruling of the federal courts.124 Chapman, P. J., said: 125 "But the view entertained by the court is that no act of congress impinges upon the collateral inheritance law. This law contemplates the imposition of no tax such as congress intended to prohibit. It is called a 'tax' or 'duty,' but has little or no analogy to a tax, in the usual acceptation of the term. It cannot be regarded as a penalty, exactly,126 but it approximates that as nearly as it does an ordinary tax." Woodward, C. J.,127 in giving the opinion of the supreme court, said: "Neither the prohibitory clause of the act of congress of 1862, nor any of the principles of decision against state authority to tax that which federal authority has exempted from taxation, have any

kind. Also that of Maryland, Appendix, VIII. The United States supreme court has frequently held that a state statute imposing a tax upon bank capital invested in United States bonds is unconstitutional, but it seems these were cases of a property tax purely, and have no application to a tax of this character. People v. Tax Com'rs of City and County of New York, 2 Black, 620; Bank Tax Case, 2 Wall. 200; Banks of New York v. Mayor, 7 Wall. 16. 123 52 Pa. St. 181; Clymer v. Com., Id. 189. See, also, In re Howard, 5 Dem. Sur. 483; Wallace v. Myers, supra; In re Van Kleeck, sub nom. Sherrill v. Christ Church, 121 N. Y. 701, 25 N. E. 50. They have also been held taxable under the New York act of 1892, c. 399. In re Carver's Estate, supra; In re Ludlow's Estate (Surr.) 25 N. Y. Supp. 989.

124 Citing McCulloch v. Maryland, 4 Wheat. 316.

125 Page 186.

126 It is not a penalty or forfeiture. Arnaud's Heirs v. His Execu itor, 3 La. 337; In re Vanderbilt's Estate (Surr.) 10 N. Y. Supp. 239. 127 52 Pa. St. 189, supra.

application here. The federal government has not prohibited the state from prescribing rules of inheritance and succession to estates of decedents, and it would be a grievous mistake of legislative and judicial authority to apply it with such effect.128

Upon the same principle, the tax was held rightfully imposed upon a collateral who was a devisee of certificates issued by the state of Pennsylvania for a state loan, which were declared by the law under which they were issued to be exempt from state, municipal, or local taxation; 129 and in a recent case in New York the law of that state was upheld by the United States circuit court, where the state sought to assess taxes upon government bonds passing to collaterals under a decedent's will.130

In the Wallace Case, supra, it was contended that the fact that the tax was assessed upon the value of the bonds showed that it was a property tax, and that it was therefore void.131 The circuit court said: "The circumstance that incidentally, under such a statute, such bonds may have to be valued, in order to ascertain the amount of the tax, does not affect its essential nature, as one upon the privilege, and not upon the bonds. Such a tax is no more upon the bonds than an income tax is one upon the property out of which the income is derived, or an excise tax is one upon the articles manufactured or sold. The bonds are the subject of the appraisal, but the privilege is the subject of the tax."132

*

128 See, also, In re Tuigg's Estate, supra.

129 Com. v. Herman (1885) 16 Wkly. Notes Cas. 210.

130 Wallace v. Myers (1889) 38 Fed. 184, citing Mager v. Grima, S How. 490; Carpenter v. Pennsylvania, 17 How. 456. See In re Howard, 5 Dem. Sur. 483; In re Tuigg's Estate (Surr.) 15 N. Y. Supp. 548; Sherrill v. Christ Church, 121 N. Y. 701, 25 N. E. 50.

131 See Pullen v. Com'rs (1872) 66 N. C. 363, where a like objection was overruled.

132 Citing Society for Savings v. Coite, 6 Wall. 594; Hamilton Co.

$ 28. United States and Municipalities-Legacies

to-Taxable.

So, under the New York statutes, it is held that, the tax being upon the privilege of succession, the state has power to tax a legacy to the United States government with the same force that it taxes a legacy to a natural person, and that it is not a taxation of the property of the federal government. Bartlett, J., said: "This tax, in effect, limits the power of testamentary disposition, and legatees and devisees take their bequests and devises subject to this tax imposed upon the succession to property. This view eliminates from the case the point urged by the appellant, that to collect this tax would be in violation of the well-established rule that the state cannot tax the property of the United States. Assuming this legacy vested in the United States at the moment of testator's death, yet, in contemplation of law, the tax was fixed on the succession at the same instant of time. This is not a tax imposed by the state on the property of the United States. The property that vests in the United States under this will is the net amount of its legacy after the succession tax is paid." 133 "In the view we take of this case, the legacy to the United States is subject to this tax, whether we consider the assessment

v. Massachusetts, Id. 632; People v. Home Ins. Co., 92 N. Y. 328, affirmed 119 U. S. 129, 8 Sup. Ct. 1385; In re Swift, 137 N. Y. 77, 32 N. E. 1096. See, also, People v. Home Ins. Co., 92 N. Y. 345, affirmed 134 U. S. 594, 10 Sup. Ct. 593; People v. Wemple (N. Y. App.) 33 N. E. 720. These cases hold that the fact that a corporation paying a franchise tax has invested some of its deposits in federal securities, exempted from taxation, does not exempt the society from the franchise tax as to the amount so invested.

133 In re Merriam's Estate (1894) 141 N. Y. 484, 36 N. E. 505; Id. (Sup.) 26 N. Y. Supp. 191; In re Cullum's Estate (1893) 5 Misc. Rep. 173, 25 N. Y. Supp. 700; Id., 76 Hun, 610, 27 N. Y. Supp. 1105, affirmed in court of appeals, 145 N. Y. 593, 40 N. E. 163, mem.

as made under the language of the law of 1892, or of the various statutes it amends and repeals. Whether the transfer is 'to persons or corporations,' in the language of the law of 1892, or 'to any person or persons, or to a body poli tic or corporate,' in the words of the earlier statutes, we are of the opinion the language includes the government of the United States. For the purpose of receiving legacies, and for many other purposes, the United States is to be regarded as a body politic and corporate." 134 So, under these decisions, it has been recently held that a legacy to the mayor, aldermen, and commonalty of the city of New York, for the purpose of erecting an ornamental fountain, is liable to taxation under the express language of the act of 1891,* Surrogate Fitzgerald holding as follows: "It is not questioned that the legatee is a 'body politic or corporate.' It is, therefore, taxable by the express verbiage of the law, unless it can be shown to be one of the 'societies, corporations, or institutions now exempted by law from taxation.' There is no provision of the constitution prohibiting the legislature from imposing a tax upon this municipality, and, so far as I have been able to learn, there is no statute which exempts it from general taxation. The privilege conferred must be obviously limited to corporations organized under the act of which it is an amendment, and cannot, by the most liberal construction, be deemed to have been intended to extend the exemption to municipal corporations. I had occasion, in Re Cullum's Estate,** to refer to the advantage, in construing the various acts taxing inheritances, of regarding them as limitations upon the power of testamentary dis

134 In re Merriam's Estate (1894) 141 N. Y. 479, 36 N. E. 505, citing U. S. v. Maurice, 2 Brock. 96, 109, Fed. Cas. No. 15,747. * Laws 1891, c. 215.

In re Hamilton's Estate, 13 N. Y. Law J. 1384.

Laws 1891, c. 215; Appendix, I.

** 5 Misc. Rep. 173, 25 N. Y. Supp. 700.