State of Ohio ex rel. v. Ferris.

Texas, 105 U. S., 460; Telegraph Co. v. Mass., 125 U. S., 530; State v. Ilipp, 38 Ohio St., 199.

Second-While it purports, generally speaking, to levy a tax upon decedents' estates, it makes an unlawful exemption of estates less than $20,000 in value. Exchange Bank v. Hines 3 Ohio St., 13; Zanesville v. Richards, 5 Ohio St., 593; Fields v. Commissioners, 36 Ohio St., 476.

Third-The law does not tax the property by a uniform rule of rate per cent. State v. Gorman, 41 N. W. Rep., 948; Bank v. Hines, 3 Ohio St., 15; State v. Hamlin, et al., 30 Atl. Rep., 76; State v. W. U. Tel. Co., 73 Me., 527; State v. Maine Centrul Ry. Co., 74 Me., 382; Ry. Co. v. State, 49 Ohio St. 189; Minot v. Winthrop, 38 N. E. Rep., 512; Hamilton Co. v. Mass., 12 Allen, 298.

BURKET, J. This case has been argued with marked ability on both sides, and the arguments have greatly aided the court in reaching its final conclusions.

We have carefully examined and considered all the cases cited by counsel, and many others, and shall state rather the conclusions reached than lengthy arguments in support thereof.

The first section of the statute in question is as follows:

Section 1. Be it enacted by the General Assembly of the State of Ohio, That all property within the jurisdiction of the state, and any interest therein, whether belonging to inhabitants of this state or not, and whether tangible or intangible, including annuities, which shall pass by will or by the intestate laws of this state, or by deed, grant, sale, or gift made or intended to take effect in possession or enjoyment after the death of the grantor, to the

State of Ohio ex rel. v. Ferris.

use of the father, mother, husband, wife, brother, sister, niece, nephew, lineal descendant, adopted child, or person recognized as an adopted child and made a legal heir under the provisions of section 4182 of the Revised Statutes of Ohio, or the lineal descendant thereof, the lineal descendant of any adopted child, the wife or widow of a son, the husband of a daughter of decedent, or of any one in trust for such person or persons, shall be liable to a tax as follows, to-wit: When the value of the entire property of such decedent exceeds the sum of twenty thousand dollars and does not exceed the sum of fifty thousand dollars, one per cent.; when it exceeds fifty thousand dollars and does not exceed one hundred thousand dollars, one and onehalf per cent.; when it exceeds one hundred thousand dollars and does not exceed two hundred thousand dollars, two per cent.; when it exceeds two hundred thousand dollars and does not exceed three hundred thousand dollars, three per cent.; when it exceeds three hundred thousand dollars and does not exceed five hundred thousand dollars, three and one-half per cent.; when it exceeds five hundred thousand dollars and does not exceed one million dollars, four per cent. ; and when it exceeds one million dollars, five per cent.; seventy-five per cent. of such tax to be for the use of the state, and twenty-five per cent. for the use of the county wherein the same is collected; and all administrators, executors and trustees shall be liable for all such taxes, with lawful interest, as hereinafter provided, until the same shall have been paid as hereinafter directed. Such taxes shall become due and payable immediately upon the death of the decedent, and shall at once become a lien upon said property."

State of Ohio ex rel. v. Ferris.

It is this first section that is claimed to be unconstitutional, and which was so held by the cir

cuit court.

In view of the authorities cited, it must be conceded that the general assembly has the power to pass an inheritance tax for purposes of general revenue, unless prohibited by the constitution of our state. Properly understood, it is not the right to transmit, but the right, and privilege to receive, that is taxed. The right to dispose of property during the lifetime of the owner, cannot be separated from the property itself, and therefore to tax the right of disposal by contract in the lifetime of the owner, even though to take effect at his death, is to tax the property itself. But the right to dispose of the property by will or descent taking effect after the death of the owner, is not so closely connected with the right of property, and it is not so clear that such right may not be taxed.

But when the right to receive the property is considered, it is clear that the right is distinct and separate from the property itself, and the state may tax this right to receive property, and this is so whether the property is disposed of by the owner during his lifetime, or at his death.

This right to receive property is under the control of the legislature, and it has the power to regulate and lay such burdens thereon as it may see fit, within the provisions of the constitution. To regulate by taxation or otherwise the privilege or right to receive property, is not in conflict with the first section of the Bill of Rights, which recognizes the inalienable right of acquiring, possessing and protecting property. Were it otherwise, all our laws as to wills, descent, distribution and conveyances would be unconstitutional.

State of Ohio ex rel. v. Ferris.

It is urged, however, that the statute in question does not tax the right or privilege of receiving property, but taxes the property itself.

It must be conceded that the language used in the statute, is upon its face clearly a taxation of the property itself, and not of the right to acquire property. And for myself, I think this is the true construction of the act. Others of the court, however, think that when the operation and effect of the statute are considered, that it may be regarded as taxing the right or privilege, rather than the property. Certain it is that the only thing that can be constitutionally taxed is the right or privilege of succession, and a statute having such taxation in view, should express its purpose in words applicable to such subject matter of taxation.

It is conceded by all parties, that if this statute imposes a tax on property, that it is unconstitutional. As a majority of the court are of opinion that it is not a tax on property, but upon the right to receive property, the statute must, as to this point, be sustained.

It is also contended that this tax is a tax on property because it is made a lien upon the real estate received, and cases are cited sustaining this view. Estate of William Bittinger, 129 Pa. St., 344.

The statute in that case provides as follows: "The tax on real estate shall remain a lien on the real estate on which the same is charged until paid." While the statute in this state provides simply that the inheritance tax "shall at once become a lien upon said property." But aside from the difference in the words of the statute there is no force in the contention. If the legislature has the power to assess a tax upon the right to receive

State of Ohio ex rel, v. Ferris

and succeed to property, it clearly has the right to make such tax a lien upon the property received by the use of such right; and the making of such lien does not change the tax from a tax upon the right to receive, to a tax upon the property received under the right.

Next, it is urged that if the statute imposes a tax only upon the right or privilege to receive property, that as the taxation thereby imposed is for general revenue, it is in conflict with section 2 of article 12 of the constitution, which provides that laws shall be passed taxing by a uniform rule all property according to its true value in money. The claim is that for purposes of general revenue property only can be taxed.

The constitution is silent as to the application of the fund arising on taxation on subjects other than property. The constitution being silent, it follows that if such taxes can be levied and collected at all, that their application is within the sole and exclusive power and discretion of the general assembly.

The power of taxation, without limitation, is given in section 1, article 2 of the constitution, which provides that: "The legislative power of this state shall be vested in a general assembly, which shall consist of a senate and house of representatives."

In Western Union Telegraph Co. v. Mayer, 28 Ohio St., 521, it was held that the general grant of legislative power vested in the general assembly by this section, includes the power to collect revenue for public purposes, and the limitations on the exercise of this power are to be found in other provisions of the constitution.