Mooney v. Hicks.

with more extended jurisdiction than that exercised by the ordinary county court it is true, but in the matters within its jurisdiction it proceeds according to the forms of courts of equity or the chancery court, and upon equitable principles no more than the ordinary county court does in the matters of which it has jurisdiction. The bar has uniformly, so far as we know, proceeded on the theory that the county court was a "court of equity" within the meaning of the act creating the court of civil appeals, and that court has heretofore, in many cases, proceeded upon such theory, and has taken jurisdiction of appeals from the county court. Among the cases of which the court of civil appeals has taken jurisdiction is the case of Nelson v. Theus, 5 Higgins, 87.

It results that the order of the court of civil appeals transferring the above cause to this court is reversed, and the cause is remanded to that court for a hearing.

143 Tenn.-27

Henson v. Monday.

JESSE L. HENSON, COUNTY COURT CLERK v. W. E. MONDAY et al.

(Knoxville. September Term, 1920.)

1. TAXATION. Inheritance tax is a privilege tax on legatees, and not on testator.

The collateral inheritance tax exacted by Thompson-Shannon's Code, section 724 et seq., is a privilege tax, laid upon the legatees and devisees under the will, and not upon the testator, being a tax on the right to acquire, and not on the right to transmit, in view of section 730. (Post, p. 421.)

Cases cited and approved: Shelton v. Campbell, 109 Tenn., 690; In re Merriam, 141 N. Y., 479; United States v. Perkins, 163 U S., 625; State v. Alston, 94 Tenn., 674; English v. Crenshaw, 120 Tenn., 531; Knox v. Emerson, 123 Tenn., 409; Crenshaw v. Moore, 124 Tenn., 528; Bailey v. Henry, 125 Tenn., 390.

Codes cited and construed: Secs. 724, 730 (T.-S.).

2. TAXATION. State not liable to taxation in absence of statute. Neither the State nor any of its arms or agencies are liable to taxation, unless expressly so declared by statute, being impliedly excluded from general tax laws. (Post, p. 422.)

Case cited and approved: Morristown v. Hamblen County, 136 Tenn., 242.

3. TAXATION. Bequest to state agencies not subject to inheritance

tax.

Bequest to the University of Tennessee, the city of Knoxville, the Knox County Industrial School, and several counties held not subject to inheritance tax under Thompson-Shannon's Code, section 724 et seq.; such legatees being agencies of the State, and the State's privilege to take property under a will not being subject to a general tax law. (Post, p. 422.)

Henson v. Monday.

Cases cited and approved: Knowlton v. Moore, 178 U. S., 41; Re

Macky, 46 Colo., 79; Snyder v. Bettman, 190 U. S., 249.

FROM KNOX.

Appeal from the Circuit Court of Knox County.-HON. VON A. HUFFAKER, Judge.

ROY A. JOHNSON and R. A. BROWN, for appellant.

WEBB & BAKER and JOHNSON & Cox, for appellee.

MR. JUSTICE GREEN delivered the opinion of the Court.

This suit was brought against the personal representatives of Benjamin Rush Strong and the legatees and devisees under his will to recover the collateral inheritance tax enacted by Thompson's Shannon's Code, section 724

et seq.

A demurrer was interposed, which the county judge sustained, and on appeal this action was affirmed by the circuit judge, and the complainant has appealed to this court. It appeared from the petition filed below that the will of Mr. Strong was being contested. The greater portion of his property was by the will given to the University of Tennessee and the city of Knoxville, the Knox County Industrial School, and several of the counties of East Tennessee. There were in addition smaller bequests to individuals. The point was made by the demur

Henson v. Monday.

rer that the defendants named above were state agencies, and that the bequests to such agencies were not subject to the inheritance tax. If the will was found invalid, the estate would pass to collateral kindred, and would be liable for the said tax. It was therefore said that, until the will contest was decided, it could not be determined what inheritance tax would accrue to the estate, and who would be liable for it, and that this suit was premature.

On the contrary, it was insisted for the complainant that the bequests to the defendants named above were subject to the inheritance tax, even though these defendants were State agencies, and that the inheritance tax was accordingly due and payable at the time the suit was brought, under Shelton v. Campbell, 109 Tenn., 690, 72 S. W., 112.

The question, therefore, for determination is whether legacies or devises to the State and its arms or agencies may be diminished by the inheritance tax levied in our statutes. It has been held in some jurisdictions that such legacies and devises are thus onerated under statutes similar to ours. In re Merriam, 141 N. Y., 479, 36 N. E., 505, affirmed by the supreme court of the United States, United States v. Perkins, 163 U. S. 625, 16 Sup. Ct., 1073, 41 L. Ed., 287; 37 Cyc., 1572, and cases cited.

It is everywhere conceded that the inheritance tax is not a tax laid on property, but is a privilege tax. In the cases just above referred to it is held that the tax is laid on the privilege of transferring or disposing of property by the deceased. Therefore, even though a bequest be to the

Henson v. Monday.

United States government, it was held liable to the New York inheritance tax, because that tax was assessed on the testator's privilege of disposition, and not on the government's right to receive.

We cannot, however, reach this result under the authorities in Tennessee. Our inheritance tax has been repeatedly declared by this court not to be a tax on the right of disposition, but a tax on the privilege of receiving property by inheritance or will.

"It is not a tax upon the right of alienation, but on the privilege of receiving, by inheritance or will or otherwise, at the death of a former owner." State v. Alston, 94 Tenn., 674, 30 S. W., 750, 28 L. R. A., 178.

Similar expressions appear in English v. Crenshaw, 120 Tenn., 531, 110 S. W., 210, 17 L. R. A. (N. S.), 753, 127 Am. St. Rep., 1025; Knox v. Emerson, 123 Tenn., 409, 131 S. W., 972; Crenshaw v. Moore, 124 Tenn., 528, 137 S. W., 924, 34 L. R. A. (N. S.), 1161, Ann. Cas., 1913A, 165; Bailey v. Henry, 125 Tenn., 390, 143 S. W., 1124.

Thompson's Shannon's Code, section 730, provides that every administrator or executor shall deduct the inheritance tax from every legacy before paying it over to the party entitled to receive it. Inasmuch, therefore, as our inheritance tax is levied upon the right to acquire, and not upon the right to transmit, and since the tax must be deducted from each legacy before it is paid over, we think there can be no question but that it must be treated as a privilege tax laid upon the legatees and devisees under the will, and not upon the testator.