Board of Education of the Kentucky Annual Conference of the Methodist Episcopal Church v. Illinois

delivered the opinion of the court.

This writ of error is directed to a judgment Of the Supreme Court of the State of Illinois sustaining a tax assessed against plaintiff in error under the inheritance tax law of that State, passed June 15, 1895, entitled “An act to tax gifts, legacies and inheritances, in certain cases, and to provide for the collection of the same.” Laws of 1895, p. 301. ...

The facts, are as follows: "Fanny Speed, a citizen and resident of Kentucky, died seized of certain real estate in, the city of . Chicago. She devised a one-half interest to plaintiff-in erf or to be used as part- of, its educational fund, “to be held/invested and administered” as other properties forming a part . of that filnd. The will was probated in the Probate Court of Cook County, State of Illinois. An inheritance tax of $6,280.50 was assessed by the county judge against plaintiff-in error, based on the value of the interest devised.

' Plaintiff in error was incorporated by aii act of the legislature - of the State of Kentucky to form an educational fund fox* the" ¡promotion of literature, education, art, morality and religion.'- . Its fürids are held and used exclusively for such purposes and""., are' required to. be wholly expended within the State of Kentucky. It is not permitted to ma^e dividends or distribution • of profits or assets among its members or stockholders, It ' " does not have or maintain an office in the State off Illinois or engage in educational or religious work therein.

From the action of the county judge imposing the tax, -plain-. tiff in error appealed to the County Court of Cook County and assigned as grounds of appeal: (1) That by reason of its organization and the purposes of its organization, as shown by the record, it was exempt from such tax under the act of May 10, 1901, amending the act of June 15, 1895. (2) For that the imposition of such tai upon it (the plaintiff in error), when

The assignment of errors in this court, omitting the specification of error based on the constitution of the State, is the same as that in. the state courts.

It is enough for our purpose to say that section one óf the act of 1895, subjects to a tax all property situated within the State, which shall by will or by the intestate laws pass from any person who may die seized or possessed of the same. The act was amended in 1901 by adding thereto the following section:' •

“When the beneficial interest of any property or income therefrom shall pass to or for the use of any hospital, religious, educational, bible, missionary, tract, scientific, benevolent or charitable purpose,' or to any trustee, bishop, or minister .of any church or religious denomination, held and used exclusively for the religious, éducational or charitable uses and purposes of such church or religious denomination,.institution or corporation, by grant,-gift, bequest or otherwise, the same shall not be subject to any such duty or tax, but this provision shall nó't apply to any corporation which has the right to make dividends or distribute profits or- assets among its members.’-’

The Supreme Court decided that this' amendment did not apply to “ corporations created • under the laws t of a sister State.” And also decided, as so construed, the amendment was not repugnant to the Constitution of the United States. The court said:

“A clear distinction exists between domestic corporations

and corporations organized under the laws of other States. Such corporations fall'naturally into their respective classes. Over the one — that which the State has created — the State' has certain powers of control, and the other is beyond its jurisdiction. Those of its own creation have been endowed with corporate powers for the- purpose of subserving the interests of the State and its people; those which have been given life by the laws of a sister State have entirely different ends and objects to accomplish. The lawmaking power would find many weighty considerations authorizing the classification of foreign and domestic corporations into different classes and justifying the creation of liability on the part of foreign-corporations to pay a tax on the right to’take property by descent, devise or bequest, under the laws of the:State, and at the same time leaving the right of a domestic corporation so to take free of any such exaction.”

It will be seen by a reference to the assignment of errors that the ground of the attack by the plaintiff in error on the validity of the tax assessed against it is that the imposition of the tax upon it, while other corporations organized for like purposes under the laws of Illinois are exempt, renders the act of May 10, 1901, void, as to plaintiff in error. . And, in their argument, counsel say: “It is the effect given by the Supreme .Court of .Illinois to this amendment (the act of 1901) that violates.the rights claimed by the plaintiff in error under the Constitution of the United States.” ' The' construction of the act by 'the Supreme Court we must accept as determining the meaning' of the act. In other words, we must regard the act as if the .legislature had, in explicit language, excluded from its provisions foreign corporations. If this renders the act void plaintiff in error, whether its argument be tenable or untenable, seems to -be put in the dilemma urged by the defendant in error, and an affirmance of the judgment is required. If the act of May 10, 1901, is invalid it cannot give exemption from taxation to either domestic or foreign corporations, and plaintiff in error was rightly taxed under the act of June 15, 1895.

Plaintiff in error .contests the classification of the act'of 1901 and the conclusions deduced from.it in an able -argument. . We do not reply to the argument in detail, because we have 'defined so often the principles Of classification that we must regard repetition as unnecessary. An observation or two, however, may be worth while. It is contended that the exemption of the amendment of 1901 “is not limited by the decision of the Supreme Court to corporate takers or users,” and that the decision, by treating the act “ as a grant of privileges and immunities to corporations,” ignored “the test of use found in the Aquiry 'To what purpose is the beneficial

It must be kept in mind that the-controversies in this case depend upon the power of the State over inheritances and the conditions she. may put upon them in the exercise of that power. And this is prominent in the decision of the Supreme Court. In considering this power, and classification in the exercise of this power, the court took into account the greater control and direction the State had over domestic than over foreign corporations. ' It did not put out of view- the uses of property expressed .in the act of 1901 nor ignore the consideration that there was no necessity for a corporate agency to execute those uses. -The case presented especially a comparison of the" rights of corporations, but the decision was-broad enough to consider natural persons. “In laying such a tax” (an inheritance tax), .the court said, “the legislature may consider the relation which the person or corporation given the right of succession sustains to the deceased, to the property or to. the State, and may regulate -the amount of the tax to be required in view of such relation, and in exercising this power may lay a tax on the right of one class of persons or corporations to take, and may deem it wise to impose no tax upon the right of other classes of persons or.corporations to

Judgment affirmed.