U.S. Supreme Court
Scholey v. Rew, 90 U.S. 23 Wall. 331 331 (1874)
Scholey v. Rew
90 U.S. (23 Wall.) 331
1. The "succession tax," imposed by the acts of June 30th, 1804, and July 13th, 1866, on every "devolution of title to any real estate," was not a "direct tax" within the meaning of the Constitution, but an "impost or excise," and was constitutional and valid.
2. A devise of an equitable interest in real estate, in which personal property had been invested by the trustee with the assent of the devisor, before the making of the will, was a devolution of real estate within the meaning of the Acts of June 30, 1864, and July 13, 1860, and the devisee is liable to the succession tax imposed thereby in respect of it if he has received its value, although in proceedings for partition he has had assigned to him only personal property.
3. An alien to whom a devise of an interest in real estate has been made and who has received its value in proceedings for partition is estopped to set up against a demand for a succession tax thereon that by the law of the state where the estate is, the devise is absolutely null and void.
4. Quaere whether a general assignment of errors that the judgment below on a special case was for the wrong party is sufficient.
5. Semble that an objection that a devise is void because of the alienage of the devisee cannot first be taken by him in this Court on a writ of error to the judgment of a circuit court on a special case, although the record discloses the fact of alienage.
Error to the Circuit Court for the Northern District of New York, in which court Scholey, a British subject, sued Rew, collector of internal revenue, to recover the amount of a "succession tax" which Rew, as collector, had demanded of him, Scholey, and which -- asserting it to be illegal -- Scholey had paid only on compulsion and under protest.
The case was found specially by the circuit court on a waiver of a jury under the Act of March 3, 1865, which authorizes such a finding by the court and enacts that when chanroblesvirtualawlibrary
the finding is special, the review by this Court may extend to the sufficiency of the facts found to support the judgment. The case so found was thus:
Elwood, of Rochester, New York, died in 1863, leaving a widow and three minor children and a large amount of personal property, besides certain real estate.
He left also a will by which, after certain bequests of personal property, he directed that all the residue of his estate, real and personal, should be divided by his executors between his wife and three children, according to the statutes of New York, as if he had died intestate -- that is to say, as the Reporter supposes, though the language or effect of the statute was nowhere stated in the record or briefs -- one-third to the wife and two-thirds between the children. And he appointed his wife and two friends, Mumford and Russel, executors of the will.
In May, 1864, Russel, as acting executor, presented to the supreme court of New York a petition setting forth that the assets of the estate were about $500,000, chiefly invested in personal securities, but including a large amount of money uninvested; that it was deemed for the interest of the estate to invest a portion of the assets in productive real estate in Rochester; and asking authority to make the purchase of certain property described, in that city, for $73,000.
In pursuance of this prayer, an order was made authorizing the executors to invest so much as should be necessary of the assets of the estate in the purchase of the real estate described, and "to purchase and to hold the same as such executors."
Under the authority of this order, the executors in May, 1864, took a conveyance of the premises to themselves as executors of Elwood's will, the survivor or survivors of them, their successors or assigns, for $72,602. These premises were thenceforth styled and spoken of as the "Elwood lot," and, after being improved, as the "Elwood block."
At the time of Elwood's death, he owned four parcels of real estate in Rochester, one of them a vacant lot on Mill Street, which parcels were altogether of the value of $50,000. chanroblesvirtualawlibrary
After the purchase of the Elwood lot the executors, by authority of the supreme court of New York, erected a building on the vacant lot on Mill Street, which cost $15,111, and also made improvements upon the Elwood lot at a cost of $49,006, which increased the value of the property at least to that amount. All these improvements were completed in the spring of 1868, and were paid for, as was also the purchase price of the Elwood lot, out of the personal property of Elwood's estate.
In October, 1867, Mrs. Elwood, the widow of Elwood, was married to Scholey, the plaintiff in the present case, and in September, 1869, she died, leaving a will. By her will, after five annuities during the lives of the five annuitants, amounting altogether to $4100 annually, certain specific legacies of personal property, and certain legacies of money, amounting to $6500, she gave all the residue of her property, real and personal, to her husband, the plaintiff, and appointed him with the above-named Mumford and one Worcester, executors.
In February, 1870, Mumford, as sole surviving executor of Elwood's will (Russel having died in 1866), instituted joint proceedings in the supreme court of New York against the three children of Elwood, against Scholey, Worcester, and Mumford, as co-executors of Mrs. Scholey's will, and against Scholey individually as her husband and residuary legatee.
The complainant alleged that Mrs. Scholey acquired some interest in or title to the Elwood block, and the once-vacant lot on Mill Street, by reason of the same's having been bought and improved out of Elwood's personal estate, and that Scholey, by virtue of Mrs. Scholey's will, claimed some title to or interest in it. It prayed that Mumford's accounts, as sole surviving executor of Elwood, and Mrs. Scholey's as sole executrix, might be settled and adjudged final and conclusive, and that her executors might be required to render accounts in furtherance of that purpose, including an account of all rents or income of said real estate received by her; that an account might be taken of all Elwood's personal chanroblesvirtualawlibrary
estate, and its value at the time of his death and at all times afterwards; that Mrs. Scholey's share in that personal estate at the time of her death and at the time of the accounting, and also "what right or title she had in and to the said real estate, bought or improved out of the personal estate of" Elwood, might be determined; that when such share or interest should be determined, it should be partitioned from the body of Elwood's estate; that the shares of the three children in their father's personal estate might be determined and partitioned off to them in severalty, and that thereafter the share of each child might be kept separate, to the end that such share, with its increase, might be paid to each respectively as he or she should become entitled to receive it.
Scholey answered, admitting the making of the various orders and the investment of the sums mentioned in the purchase and improvement of real estate; denied the binding character of the orders, but admitted the propriety of the investments in case the advantages thereof were to be equitably shared by the parties interested in the funds invested, in proportion to their respecti