Riley v. Worcester County Trust Co.

MORTON, Circuit Judge

(dissenting).

I agree that the Interpleader Act as amended is broad enough to cover the present case of conflicting claims to an estate tax which can be justly collected by only one of the claimants. But I do not think, as my brethren hold, “that the claimants here sought to be impleaded are the States of California and Massachusetts for taxes due them, not the officials personally,” and that the act is on that ground unavailable. While the bill might be more' clearly and definitely phrased, I understand it to allege that the tax officials of both California and Massachusetts are claiming an estate tax on the estate of decedent, Hunt; that only one such tax can legally be collected, and .that plaintiffs are ready to pay it.; and that the claim made by each state official is wholly unwarranted in law, is without legal, justification under any statute, and violates the Fourteenth Amendment. • It is characteristic of bills in the nature of interpleader under this statute that the plaintiff concedes indebtedness to one or the other of the claimants, but denies indebtedness or obligation to each one separately.

I take it as settled by First National Bank v. Maine, 284 U.S. 312, 52 S.Ct. 174, 76 L.Ed. 313, 77 A.L.R. 1401, that no state may impose an estate tax on the estate .of a decedént unless he was domiciled within its borders. To do so is unconstitutional. Plainly, if Hunt was domiciled in Massachusetts, then California tax officials are acting not only illegally, but unconstitutionally, in undertaking to tax his estate— and vice versa. I also take it to be settled that a state official, who takes, or threatens to take, action which is unconstitutional or without any warrant in law, may be enjoined. He is not the state for the purpose of such illegal action. Sterling v. Constantin, 287 U.S. 378, 393, 53 S.Ct. 190, 193, 77 L.Ed. 375. In Greene et al., Board of Valuation and Assessment of the State of Kentucky v. Louisville, etc., Railroad Company, 244 U.S. 499, 37 S.Ct. 673, 61 L. Ed. 1280, Ann.Cas.l917E, 88, the plaintiffs were, as the title of the case indicates, the Taxation Board of the state of Kentucky, but they were held liable to suit, and it was said that the liability to suit of such' officials was not confined to cases where they were attempting -to enforce an unconstitutional statute. “A valid law may be wrongfully administered by officers of the state, and so as to make such administration an illegal burden and exaction upon the individual,” Reagan v. Farmers Loan & Trust Co., 154 U.S. 362, 390, 14 S.Ct. 1047, 1051, 38 L.Ed. 1014. See too Terrace v. Thompson, 263 U.S. 197, 44 S.Ct. 15, 68 L.Ed. 255.

*69A state official who is acting illegally and without jurisdiction, as both these tax officials are alleged to be acting and one of them concededly is acting, cannot successfully maintain that the Eleventh Amendment bars any suit against him. As to one or the other of the claimants, the plaintiff’s allegation that he is acting unconstitutionally and in violation of law is bound to fail, and as to that one the suit will then be dismissed because he will be, legally speaking, the state, of which he is an official acting in the proper performance of his legal duty; as to the other, it will appear that he is acting unconstitutionally and illegally. As I have said, such a result is inherent in suits in the nature of interpleader, that one claimant is adjudged to have a good claim against the plaintiff, and the other not. Jurisdiction depends on the allegations of the bill against each claimant.

It has been said on the highest authority that “Taxation is an intensely practical matter, and laws in respect of it should be construed and applied with a view of avoiding, so far as possible, unjust and oppressive consequences.” McReynolds, J., Farmers’ Loan & Trust Co. v. Minnesota, 280 U.S. 204, 212, 50 S.Ct. 98, 100, 74 L.Ed. 371, 65 A.L.R. 1000. Considering the recognized defect in our system of taxation which this statute is designed to cure, the example of shocking injustice to which it has led in the Dorrance Case, 116 N.J.Law, 362, 184 A. 743 ; 309 Pa. 151, 163 A. 303; 298 U.S. 678, 56 S.Ct. 949, 80 L.Ed. 1399, which is a reproach to our law, and the constant threat of similar injustice in all cases in which there is a dispute as to domicile, I think this statute should receive a liberal interpretation, and that, on points which are at best rather technical and procedural in character, doubt should be resolved in favor of jurisdiction under this statute, which appears to be the only practicable method of remedying the evil. See 45 Yale Law Journal, 1173, discussion of this statute by Prof. Chaffee, and 49 Harvard Law Review, 1378, a note on this statute in tax cases. One of the claimants, Mr. Long, Tax Commissioner of Massachusetts, regards the considerations just mentioned as so weighty that he makes no objection on jurisdictional grounds and approves the practice of submitting such cases of disputed domicile to the impartial determination of the federal courts. Various technical objections made by the appellant seem to me to have been fully and correctly dealt with by Judge Brewster in the District Court, whose opinion it is unnecessary to restate. I think the judgment appealed from should be affirmed.