set apart for the trust, or, if separation is impossible, that priority of lien should be adjudg-ed in favor of the trust-estate for the value of the trust propperty or funds, or proceeds. of the trust property, entering into and constituting a part of the assets. This rule simply asserts the right of the true owner tobis own property. But it is the general rule '" '" '" that, in order to follow trust funds, ... '" '" they must be identified. ... '" '" The courts below seem to have proceeded upon a supposed equity springing from the circumstance that, by the application of the fund to the payment of White's creditors, the assigned estate was relieved pro tanto from debts which otherwise would have been charged upon it, and that thereby the. remaining creditors ... '" ... will be benefited. We think this is quite too vague an equity for . Judicial cognizance." Bill dismissed without prejudice.
(Oi'l'cuit Oourt, S. D. Nf/lD York. March 28,1889.)
CONSTITUTIONAL LAw-INHERITANCE TAX.
Act N. Y. 1885, as amended by Laws 1887, Co 713. imposes a tax of IS per cent. apon the value of property passing to any person not within certain degrees of consanguinity to the decedent. by will or the intestate laws. from any person who may die seised or possessed of the same while a resident of the state. or which IS within the state at the time of his death. Held, that as the law operates alike on all property and persons similarly situated, and the assessment is made by a judicial officer. after due notice and opportunity to be heard. it does not conflict with the fourteenth amendment to the federal constitution. Where the property of the decedent includes United States bonds, the tax may be assessed upon the basis of their value. The tax is. not imposed upon the bonds, but is merely a tax upon the privilege of acquiring property by inheritance. On demurrer to bill.
SAME-TAX ON UNITED STATES BONDS.
Bill for injunction. Cornelius Jiliske, for complainants.
Oha'l'le8F. Tabor, Atty. Gen., for defendant.
WAUJACE. J. This is a suit to restrain the defendant, as comptroller of the city of New York, from collecting certain taxes assessed under the provisions of the act of the legislature of the state of New York of 1885, entitled "An act to tax gifts, legacies, and collateral inheritances in cer. tain cases," as amended by chapter 713 of the Laws of 1887. These laws impose a tax of 5 per centum upon the value of the property passing to any person not within certain degrees of consanguinity to the decedent by will or the intestate laws of the state, from any person who may die seised or possessed of the same while being a resident of the state, or which is within the state at .the time of his death. The bill of complaint shows that ill the present case there was included in the property of the decedent, upon which the tax was assessed, $28,000 of
WALLACE t7. MYERS.
United States government bonds. The defendant has demurred to the bill. The contention for the complainants is that the legislation is un(lonstitutional, and, if valid, that as to the government bonds the tax is void. The decision in Re McPherson, 104 N. Y. 306, 10 N. E. Rep. 685, disposes of the objections to the legislation which rest upon the ground that it is in conflict with the constitution of the state; and the cases of Mager v. Grima, 8 How. 490, and Carpenterv. Pennsylvania, 17 How. 456, meet most of those which assert that it is in contravention of the constitution of the United States. Inasmuch as the law operates alike on all prop.erty and persons similarly situated, and the assessment is made by a judicial officer after notice and opportunity to be heard by the persons interested, it does not conflict with the provisions of the fourteenth amendment of the constitution of the United States. Railroad Co. v; Richmond, 96 U. S. 521; Barbierv. Connolly, 113 U. S. 27,5 Sup. Ct. Rep. 357; TVurts v. Hoagland, 114 U. S. 606, 5 Sup. CLRep. 1086; Railroad Taa: . Oases, 115 U. S. 321, 6 Sup. Ct. Rep. 57. The serious question in the case is whether the tax is void to the extent that the assessment was based upon the value of the United States bonds which were included in the property of the decedent. This question is fairly a debatable one, but seems to be satisfactorily answered by the consideration that the "tax is not imposed upon the bonds, but is one upon the privilege of acquiring property by inheritance. The circumstance that incidentally under such a statute such bonds may have to be valued in order to ascertain the amount of the tax does not affect its essential nature as one upon the privilege, and not upon the bonds. The statute exacts compensation in the form of a tax, and measures the price according to the value of the inheritance; and the only purpose and effect of valuing the bonds when they form a part of a decedent's estate is to ascertain and measure the value of the privilege. Such a tax is no more one upon the bonds than an income tax is one upon the property out of which the income is derived, or an excise tax is one upon the articles manufactured or sold. The bonds are the subject of the appraisal, but the privilege is the subject of the. tax. Inasmuch as it is lawful for the state to withhold altogether the privilege of acquiring property within its dominion by will or inheritance, whether the property consists of :government bonds or anything else, it is lawful for the legislature to annex any conditions to the privilege which may seem expedient and do not conflict with the organic law of the state, or the constitution or laws -of the United States. In the language of the court in v. Grima, where a similar statute was under consideration: "The law in question is nothing more than the exercise of the power which -every state and sovereignty possesses, of regulating the manner and terms upon which property real or personal within its dominion may be transmitted by last will and testament, or by inheritance, and of prescribing who shall and who shall not be capable of taking it." The terms of the act of congress of June 30, 1864, (13 U. S. St. 285,) taxing legacies and successions are quite similar to those of the present statute in respect to the valuation for assessment. The subject-matter
FEDERAl.. REPORTER; Vol.
v. Rew, 23 Wall. 331, to be the devolution of the estate" or the right to become beneficially entitled to it; and the act was considered as taxing a privilege, and not property. InVitginia the highest court of the state has construed a similar statute as imposing the tax, not upon the property, but upon the privilege of acquiring it by will or under the intestate laws. Eyre v. Jacob, 14 Grat. 422;, MiUer v. Com., 27 Grat. 110. The precise question now presented was considered by the supreme court of Pennsylvania in Strode v. Cbm., 52 Pa. St. 181, and the courttreated the statute, not as taxing propel'ty, but as a regulation of the transmission of the propertyof decedents; and upon that view held that government securities were properly included in the valuation of the inheritance upon which the tax was assessed. If such statutes are to be regarded as taxing a privilege, and not property; then the cases of Society v. Coite, 6 Wall. 594, ,and InBtitution v. Ma88ach'U8ett8, Id; 631, furnish by analogy the rule which should be applied in the present case. In the latter case the court used the following language: "GraQting that it is not a property tax, then it must be considered as a franchise tax laid upon the corporation for the privileges conferred by the charter, which, by alltheauthol'ities, it is competent for the state to tax, irrespecth'e of what disposition the institution bas made of the funds, or in what manner they may have b!len invested." ,Accordingly the court held in those cases that, although by the statute imposing the tax the amount was to be ascertained by the amount of the deposits of the corporation, the circumstance that those deposits were invested in government securities was not material. The case of People v. l'MU11'ance Co., 92 N. Y. 328, affirmed by the supreme court in InM'ance Co. v. New York, 119 U. S. 129,8 Sup. Ct. Rep. 1385, is also instructive. There a statute of New York imposed the tax upon the franchises ·of corporations within the state, to be assessed upon the Rmount of the dividends upon the capital stock. The court held that in ascertaining the basis for computing the amount of the tax, the portion of the dividends derived from, the investment of the corporation in United States securities was not to be deducted. No opinIon was proby the supreme court in deciding this case. It is to be observed, however, that it was not even contended for the corporation in that court that the tax was to any extent void or excessive if it was a franchise tax, but the contention was that it was in effect a tax upon the property. of the corporation, and therefore void, so far as it was based upon property in the form of United States securities. In any view, the court must have held that if it was a franchise tax the valuation of United States securities as a basis of assessment was, permissible. The authorities thus referred to should control the decision of the present case, in the absence of direcUy in point by the supreme court. The demurrer is sustained. '
6f the assessment undertbat act was'held by the supreme court in Scholey
POWELLV. OREGONIANRY. 00.
POWELL ". OREGONIAN
.March 18, 1889,.)
A judgment against a corporation for the recovery of money is conclusive evidence, in a suit agaiI.lst a stockholder for the collection'of said judgment, of the existence of the corporation, and its liability to plaintiff therein. as thereby determined; and such judgment, whether given in an action ex con· or ex delicto, is thereafter an indebtedness of the corporation for which a stockholder is liable to the amount due on his stock.
Ina suit to collect a ,jUdgment against an insolvent corporation from a stockholder thereof. the statute does not commence to run against the judg. ment creditor and in favor,of the stockholder until the entry of the judgment. (Sll11alru8'bll the Court.)
Lnd:ITATION OF ACTIONS-RUNNING OF STA'tUTlll.
At Law. Action b¥ W. S. Powell against the Oregonian Railway Company. A. L. Frazer, for plaintiff. Earl a. Bronaugh, for defendant.
DEADY, J. This suit is brought to collect from the defendant a judgment obtained by the plaintiff on April 8, 1887, against the Dayton, Sheridan & Grand Ronde Railway Company, for the sum of $5,300. The defendant is sued as the holder of 1,000 shares of stock of said corporation, .since February 27, 1884, on which there is due and unpaid the sum of $39,000; and it is alleged in the bill that these are the only shares of the stock on which anything is due. The case was before this court on December 8, 1888, (36 Fed. Rep. 726,) ona demurrer to the bill, when it was held that a judgment obtained against an Oregon corporation for permissive waste constituted an "indebtedness" of such corporation, within the purview of article 11. § 3,of the constitution of the state, for which a stockholder therein is liable thereunder to the amount of his unpaid stock. In Ladd v. Cartwright, 7 Or. 329, it was held by the supreme court of the state that a creditor of a corporation cannot proceed against a Eltocknolder to subject any unpaid balance on the latter's stock to the payment of his claim in the first instance. But he must exhaust his remedy at law against the corporation, when he may proceed inequity against all the delinquent stockholders, where the rights of all parties may be adjusted in one suit. See, also, Patterson v. Lynde, 106 U. S. 519, 1 Sup. Ct. Rep.. 432j Pollard v. Bailey, 20 Wall. 520. On the overruling of the demurrer, the defendant had leave to answer the bill. The answer is excepted to for impertinence. The exceptions include the greater part of the pleading. In and by the matter excepted to, the defendant alleges in effect: (1) That the Dayton, Sheridan & Grand Ronde Railway Company was dissolved, and not in existence on January 29, 1887, when the action was commenced, in which the judgment sought to be enforced was obtained, the latter is void. . (2) That the cause of such action was and