Post at
437 U. S.
615.
I am not so sure as they that
Texas v. Florida,
306 U. S. 398
(1939), was wrongly decided. But, whatever the case, I would still
deny California's motion to file a bill of complaint at this time.
If we have jurisdiction at all, that jurisdiction certainly does
not attach until it can be shown that two States may possibly be
able to obtain conflicting adjudications of domicile. That showing
has not been made at this time in this case, since it may well be
possible for the Hughes estate to
Page 437 U. S. 602
obtain a judgment under the Federal Interpleader Statute, 28
U.S.C. § 1335, from a United States district court, which would be
binding on both California and Texas. In this event, the
precondition for our original jurisdiction would be lacking.
Accordingly, I would deny California's motion, at least until such
time as it is shown that such a statutory interpleader action
cannot or will not be brought.
MR. JUSTICE STEWART, with whom MR. JUSTICE POWELL and MR.
JUSTICE STEVENS join, concurring.
California seeks to invoke the original and exclusive
jurisdiction of this Court to settle a dispute with the State of
Texas over the question of which State has the power to collect
death taxes from the estate of the late Howard Robard Hughes. The
Court today, without explanation of any kind, evidently concludes
that California's complaint does not state a claim within our
original and exclusive jurisdiction. This conclusion seems to me
squarely contrary to a longstanding precedent of this Court, the
case of
Texas v. Florida, 306 U.
S. 398. I have joined in the order denying California's
motion for leave to file this complaint only because I think
Texas v. Florida was wrongly decided, and should be
overruled.
I
According to the complaint, California imposes an inheritance
tax on the real and tangible personal property located within its
borders, and upon the intangible personalty wherever situated, of a
person domiciled in the State at the time of his death, and Texas
follows precisely the same policy. [
Footnote 1]
Page 437 U. S. 603
The complaint alleges that the taxing authorities in each State
are claiming in good faith that the decedent Hughes was domiciled
in their State at the time of his death, and have instituted
proceedings to tax all the assets of the estate within the
jurisdiction, as well as the intangibles (consisting of shares of
stock in a single holding company) that constitute the great bulk
of the estate's assets. [
Footnote
2]
The common law in both States recognizes, as a theoretical
matter, that a person has only one domicile for purposes of death
taxes. Nevertheless, the complaint alleges, since neither Texas nor
California is or will become a party to the proceedings in the
other's courts, neither will be bound by an adverse determination
of domicile in the other's forum. Finally, and at the crux of the
dispute, the complaint alleges that, if both California and Texas
obtain judgments for estate taxes in their respective courts and
impose their taxes on the basis of the valuation of assets set
forth in the federal estate tax return, the estate's total
liability for federal and state taxes will exceed its net value.
Thus, the complaint alleges that, if the United States and Texas
were to collect the taxes claimed by them, and if the California
courts should ultimately determine that Hughes was a domiciliary of
California at the time of his death, then California would be left
with an entirely valid tax judgment that would be uncollectible to
the extent of about $21 million.
In sum, the complaint alleges that,
"because there is no other means by which the conflicting tax
claims of Texas and California can be resolved, this Court is the
only forum which can determine the question of decedent's domicile
in a manner that will bind the interested parties and assure that
the state of domicile, if California or Texas, will be able to
collect the tax."
California invokes the original and exclusive jurisdiction
Page 437 U. S. 604
of this Court on the authority of
Texas v. Florida,
supra.
II
In
Texas v. Florida, this Court accepted original
jurisdiction of Texas' complaint
"in the nature of a bill of interpleader, brought to determine
the true domicile of [a] decedent as the basis of rival claims of
four states for death taxes upon his estate. . . ."
306 U.S. at
306 U. S. 401.
Texas and each of the three defendant States claimed that the
decedent, Colonel Edward Green, son of the legendary Hetty Green,
[
Footnote 3] was its
domiciliary, and that it was entitled to collect death taxes upon
his intangible property wherever located, as well as upon his
tangible property within the State. None of the States had reduced
its tax claim to judgment, but all conceded that the decedent's
estate was insufficient to satisfy the total amount of taxes
claimed: that is, if all four States were successful in their own
courts and obtained judgments for taxes in the full amount claimed,
the estate would be insufficient to cover all of the claims.
[
Footnote 4]
Although none of the parties raised any question of this Court's
jurisdiction, the Court considered the question
sua
sponte. It held that, since the suit was between States, Art.
III, § 2, of the Constitution conferred original jurisdiction to
decide the case so long as
"the issue framed by the pleadings
Page 437 U. S. 605
constitutes a justiciable 'case' or 'controversy' within the
meaning of the Constitutional provision, and . . . the facts
alleged and found afford an adequate basis for relief according to
accepted doctrines of the common law or equity systems of
jurisprudence. . . ."
306 U.S. at
306 U. S.
405.
The Court found such a basis for relief by analogizing the suit
to a bill in the nature of interpleader. This procedure had
developed in equity to avert the "risk of loss ensuing from the
demands in separate suits of rival claimants to the same debt or
legal duty" by requiring the claimants to "litigate in a single
suit their ownership of the asserted claim."
Id. at
306 U. S.
405-406. [
Footnote
5] Since the law of each of the claiming States provided that a
decedent could be domiciled in only one State for purposes of death
taxes, the Court held that the competing tax claims were in fact
conflicting claims to the same single legal duty.
Thus, viewing the suit as one in the nature of interpleader, the
Court also found that the controversy was ripe for decision. Since
each State's claim was sufficiently substantial to support a
finding of domicile, there was a "fair probability" that each would
be successful in its own courts, and that the estate's assets would
be insufficient to meet all of the claims. The Court therefore
found a justiciable present controversy in the substantial "risk of
loss [to] the state lawfully entitled to collect the tax."
Id. at
306 U. S.
410-411. The Court perceived no jurisdictional frailty
in the fact that none of the claiming States had completed
proceedings to collect its inheritance tax, since a plaintiff in an
interpleader action was ordinarily not required to await actual
institution of independent suits: "[I]t is enough if he shows that
conflicting claims are asserted
Page 437 U. S. 606
and that the consequent risk of loss is substantial."
Id. at
306 U. S. 406.
[
Footnote 6]
The facts alleged in the complaint now before us are
indistinguishable in all material respects from those on which
jurisdiction was based in
Texas v. Florida. [
Footnote 7] This Court has original and
exclusive jurisdiction of disputes between two or more States, 28
U.S.C. § 1251(a)(1), and it has a responsibility to exercise that
jurisdiction when it is properly invoked.
See Cohens v.
Virginia, 6 Wheat. 264,
19 U. S. 404;
Massachusetts v. Missouri, 308 U. S.
1,
308 U. S. 19-20.
If
Texas v. Florida was correctly decided, the Court,
therefore, is under a duty in this case to grant California's
motion to file its complaint.
I believe, however, that
Texas v. Florida was wrongly
decided. Its conclusion that there was a case or controversy among
the claiming States depended entirely on the analogy to a suit in
the nature of interpleader to settle the question of the decedent's
domicile. Yet it seems to me that, in resting upon that analogy,
the Court focused erroneously on the plight of the estate, which
was indeed confronted with a "substantial likelihood" of multiple
and inconsistent tax claims, and overlooked the fact that the
dispute among the claiming States -- stemming solely from the
possibility that the estate might be insufficient to satisfy all of
their claims -- was not a case or controversy in the constitutional
sense.
Page 437 U. S. 607
III
The Court's readiness in
Texas v. Florida to accept the
interpleader analogy is understandable in the context of the then
state of the law governing multiple taxation of intangibles.
Before 1931, it had been taken as settled that, because the
question of domicile was purely one of state law, it "must in many
cases be impossible to have a single controlling decision upon the
question," unless all interested parties could, by chance or
voluntary appearance, be brought before a single forum.
Baker
v. Baker, Eccles & Co., 242 U. S. 394,
242 U. S. 405. But
when this Court held in 1931 that shares of stock and other
intangible property could constitutionally "be subjected to a death
transfer tax by one state only," that being the State of the
decedent's domicile,
First National Bank v. Maine,
284 U. S. 312,
284 U. S.
328-330, it seemed implicit that there must be some
means of protecting that right in a federal forum. The obvious next
question was under what federal court procedures conflicting state
claims of domicile were to be resolved. [
Footnote 8]
The somewhat unexpected answer came in
Worcester County
Trust Co. v. Riley, 302 U. S. 292,
which held that, at least for the ordinary estate, there was no
means of forcing unwilling States to litigate the question of
domicile, and the consequent right to tax the estate's intangibles,
in a federal district court. In that case, the estate of a decedent
attempted to sue the taxing officials of two different States under
the recently enacted Federal Interpleader Statute, 28 U.S.C. §
1335, to obtain a single, binding determination of the decedent's
domicile at the time of his death. Despite the broad language of
the
First National Bank case, the Court held that
"[n]either the Fourteenth Amendment nor the full faith and
credit clause requires uniformity in the decisions of the
courts
Page 437 U. S. 608
of different states as to the place of domicil, where the
exertion of state power is dependent upon domicil within its
boundaries."
302 U.S. at
302 U. S. 299.
After thus making clear that the imposition of multiple estate
taxes on the basis of inconsistent adjudications of domicile
presented no federal constitutional question, the opinion of the
Court went on to foreclose recourse to the federal interpleader
jurisdiction. Federal interpleader is based on diversity of
citizenship jurisdiction,
see State Farm Fire & Casualty
Co. v. Tashire, 386 U. S. 523,
386 U. S.
530-531, and a federal question is ordinarily not
required. [
Footnote 9] But
because the state tax officials were not acting unconstitutionally
in attempting to impose taxes on the basis of valid state court
judgments, the Court held that the interpleader action was, in
substance, a suit against the States themselves, and therefore
barred by the Eleventh Amendment.
See Ex parte Young,
209 U. S. 123.
[
Footnote 10]
Page 437 U. S. 609
When the identical type of dispute was placed before this Court
two years later in
Texas v. Florida, the Court was thus
understandably persuaded to view the complaint as presenting a
question of domicile resolvable by a suit in the nature of
interpleader to determine which State could alone impose the death
tax. [
Footnote 11] But the
issue of the decedent's domicile in that case was merely a
coincidental premise to the real basis of the dispute among the
tates -- the risk that the claims of the competing States would
exceed the net value of the estate, and that "the state lawfully
entitled to collect the tax" would find itself unable to do so.
[
Footnote 12]
As the opinion in
Texas v. Florida made clear, insofar
as the rights of the
estate were concerned,
each
of the four States was "lawfully entitled" to collect the tax:
"[T]wo or more states may each constitutionally assess death
taxes on a decedent's intangibles upon a judicial determination
that the
Page 437 U. S. 610
decedent was domiciled within it. . . ."
306 U.S. at
306 U. S. 410.
And a few months later, the Court elaborated on this doctrine when
it denied a motion to file a complaint in
Massachusetts v.
Missouri, 308 U. S. 1. There,
the Court made clear that both States were equally entitled to
impose a tax so long as there was no risk that the estate would be
depleted:
"Missouri, in claiming a right to recover taxes from the
respondent trustees, or in taking proceedings for collection, is
not injuring Massachusetts. By the allegations, the property held
in Missouri is amply sufficient to answer the claims of both
States, and recovery by either does not impair the exercise of any
right the other may have."
Id. at
308 U. S. 15.
Thus, even after
Texas v. Florida, there was still no
forum in which an estate confronted with conflicting tax claims
could obtain a single, binding adjudication of domicile. So long as
it was able to pay each State's claim, it was required to pay taxes
to any State that obtained a judgment of domicile in its own
courts. And so long as the assets of the estate were sufficient to
answer all claims, a State could not obtain an adjudication in this
Court as to which State had "the jurisdiction and lawful right" to
impose inheritance taxes. Only in the very rare situation when a
decedent's estate was threatened with death tax claims of two or
more States that, together, exceeded its assets, and only if one of
the competing States then invoked this Court's original
jurisdiction, would the Court undertake to decide the decedent's
true domicile and grant one State the exclusive right to tax the
decedent's estate.
IV
In reality, the facts in
Texas v. Florida, as well as
the allegations in the complaint now before us, contain the seeds
of two distinct lawsuits. One is a dispute between two States as to
the proper division of a finite sum of money. The other is a suit
in the nature of interpleader to settle the question of a
decedent's domicile for purposes of the taxes to be imposed
Page 437 U. S. 611
upon his estate. But the suit in the nature of interpleader is
not within the original and exclusive jurisdiction of this Court,
because it is not a dispute between States. And the dispute between
the States, if indeed it is justiciable at all, is certainly not
yet a case or controversy within the constitutional meaning of that
term.
A
What California seeks in the present complaint is a
determination of where Howard Hughes was domiciled at the time of
his death. It is clear to me that, if presented by a proper party
in a proper forum, this determination could and should be made in
response to a bill of interpleader.
See nn.
9 and |
9
and S. 601fn10|>10,
supra. But if interpleader
generally affords no remedy to a decedent's estate that is faced
with the threat of multiple taxation, there is no logical reason
why the remedy should be available in the rare situation where the
multiple taxation would wipe the estate out entirely. If it is
unfair to subject an estate to two domicile-based taxes when all
agree that it is possible to have only one domicile, that
unfairness is just as great, if not greater, when a decedent's
estate is able to pay the taxes to both States.
It must be recognized, however, that what is involved is
unfairness to the estate, not to the taxing States. The remedy of
interpleader exists, if at all, to require litigation of the
inconsistent tax claims in a single forum in order to avert the
risk of loss to the
estate that would result from separate
adjudications. But the only live controversy in such a suit is
between each State and the decedent's estate as to the legal
obligation to pay death taxes. There is, in fact, no present
dispute
between the claiming States.
In the present case, it would be of no possible concern to
either California or Texas that the other might adjudge Hughes a
domiciliary and succeed in taxing his estate, except for the
possibility that the other's tax might exhaust the
Page 437 U. S. 612
estate entirely before it is able to satisfy its own tax
judgment. Thus, to the extent that the concern of this action is to
prevent the possibility that the estate will be subjected to double
taxation, it does not present a dispute between two States within
the original and exclusive jurisdiction of this Court. For a State
may seek the aid of this Court only to protect its own interests,
not the interests of others.
See Massachusetts v. Missouri,
supra, at
308 U. S. 15.
B
The dispute between California and Texas, therefore, is not
really over which of them has the right to impose a domiciliary tax
upon the Hughes estate. Indeed the dilemma of multiple taxation
arises only because the Constitution permits both States to impose
the tax.
Worcester County Trust Co. v. Riley, 302 U.
S. 292. [
Footnote
13] The real dispute arises solely from the risk that one of
the States will be left with an entirely valid but uncollectible
tax judgment.
Massachusetts v. Missouri, supra at
308 U. S. 15. The
conflict would be equally real if the two States were staking their
tax claims to the finite assets of the estate on entirely different
grounds, or if both States claimed as judgment creditors on the
basis of completely different debts incurred while Hughes was still
alive.
Page 437 U. S. 613
In the latter situation, the question of domicile would be
irrelevant, and there is no compelling reason why it should have
been the dispositive question in
Texas v. Florida. For
when this Court exercises its original jurisdiction to settle a
dispute between two States, it does not look to the law of each
State, but rather creates its own rules of decision.
"The determination of the relative rights of contending States
in respect of the use of streams flowing through them does not
depend upon the same considerations, and is not governed by the
same rules of law, that are applied in such States for the solution
of similar questions of private right."
Connecticut v. Massachusetts, 282 U.
S. 660,
282 U. S. 670.
The determination of the relative rights of two States that both
claim the power to tax a decedent's estate similarly should not
necessarily depend on the same considerations that would govern the
question under state law.
In deciding the controversy between Texas and California the
Court could, of course, determine, according to its own rules of
decision where Hughes was domiciled when he died, and permit only
the State of domicile to tax the estate.
Cf. Texas v. New
Jersey, 379 U. S. 674. But
assuming there are sufficient contacts with each State to support a
finding of domicile under each State's law -- a premise of
jurisdiction in
Texas v. Florida. -- the Court could, with
equal validity, decide that the proper disposition was a division
of the assets of the estate based on a judgment as to the relative
strength of the domicile claims, or on almost any other basis that
seemed just. Indeed, for purposes of this Court's resolution of a
dispute between two sovereign States, each of which has an equally
valid claim under its own law, it would seem more appropriate to
decide the case on some neutral principle, rather than attempt to
determine a single "correct" answer under state common law.
In any event, the question for decision would be one to be
resolved under federal law, not under the state law of
domicile.
Page 437 U. S. 614
A prior adjudication of domicile in the courts of either of the
claiming States would not bind this Court in any respect, or
prevent it from affording whatever relief it deemed appropriate.
Thus, California. unlike the ordinary claimant in an interpleader
action, will not be met with the bar of
res judicata if
its potential conflict with Texas is not preempted at this
incipient stage.
Cf. Treinies v. Sunshine Mining Co.,
308 U. S. 66,
308 U. S.
74-78.
The original jurisdiction of this Court exists to remedy real
and substantial injuries inflicted by sovereign States upon their
sister States.
New York v. New Jersey, 256 U.
S. 296,
256 U. S. 309;
Massachusetts v. Missouri, 308 U. S.
1. As yet, California has suffered no injury at the hand
of Texas, and there is indeed a "fair probability" that the injury
will never come to pass. California has not obtained a judgment in
its own courts that Hughes died domiciled there, but merely a
conditional agreement from the estate's representative not to
contest California's assertion of domicile in this Court if the
present complaint is accepted for filing. Moreover, whether or not
the estate will, in fact, be insufficient to meet the various tax
claims may depend on how the assets are finally evaluated and what
deductions the various taxing authorities allow. While the risk of
conflict poses a sufficiently real threat to the estate to present
a ripe controversy if an interpleader suit were filed by the
appropriate parties in a federal district court, [
Footnote 14] that risk certainly does not
amount to "clear and convincing evidence" of an actual injury of
"serious magnitude" inflicted by one State upon another.
New
York v. New Jersey, supra at
256 U. S. 309;
Missouri v. Illinois, 200 U. S. 496,
200 U. S.
521.
Indeed, it is not at all clear to me that the injury threatened
here -- essentially that one State will be left with an
uncollectible judgment because another State has exhausted a
debtor's funds -- would be sufficient to justify the exercise of
this Court's original jurisdiction even if the injury actually
Page 437 U. S. 615
occurred. [
Footnote 15]
But even assuming that it would be, such jurisdiction surely does
not exist until each State has finally established an enforceable
claim under state law and it is clear that the estate's assets are
insufficient to meet both claims.
It is for these reasons that I join in the order of the Court
denying California's motion for leave to file its complaint.
[
Footnote 1]
Tangible personal property and realty are constitutionally
subject to taxation only at the place of situs.
See Union
Refrigerator Transit Co. v. Kentucky, 199 U.
S. 194;
City Bank Farmers Trust Co. v.
Schnader, 293 U. S. 112. As
will be developed more fully,
infra at
437 U. S.
607-610, intangible personal property may, at least
theoretically, be taxed only at the place of the owner's domicile.
First Nat. Bank v. Maine, 284 U.
S. 312.
[
Footnote 2]
In each State, the personal representative of the Hughes estate
is contesting the tax claim, asserting that Hughes died domiciled
in Nevada -- the only State in the Union without death taxes.
[
Footnote 3]
See 7 Dictionary of American Biography 545 (1931).
[
Footnote 4]
The case had been assigned to a Special Master and fully
litigated on the merits before the Court raised the question of its
jurisdiction
sua sponte. The Special Master found that the
net estate would amount to $36,137,335, and that the total tax
claims of the United States and the four claiming States was
$37,727,213 -- roughly $17.5 million by the United States, $4.6
million each by Texas and Florida, $5 million by Massachussets, and
$6 million by New York. 306 U.S. at
306 U. S. 409
n. 2. Since the assets of the estate fell short of the total tax
claims by only about $1.6 million, it was clear that there would be
no shortfall unless all four state claims were sustained, and
indeed that no State would go completely unsatisfied in its tax
judgment even if the claims of all four States were sustained.
[
Footnote 5]
In true interpleader, the stakeholder bringing suit asserts no
interest in the fund. The bill in the nature of interpleader, by
contrast, allows an interested claimant to seek adjudication of all
claims to the fund including his own.
See id. at
306 U. S.
406.
[
Footnote 6]
On the merits, the Court confirmed the Master's finding that
Colonel Green was domiciled in Massachusetts at the time of his
death, and that Massachusetts was therefore the only State lawfully
entitled to tax the intangible personal property in his estate.
[
Footnote 7]
Texas does not concede that all tax claims will necessarily
exceed the value of the Hughes estate, and argues that this fact
distinguishes the present case from
Texas v. Florida. But
in that case, it was not the concessions of the parties that did or
could confer jurisdiction upon the Court. Rather, the Court held
that a mere "fair probability" of inconsistent adjudications and
consequent "substantial" risk of loss was sufficient to create a
constitutional case or controversy in the nature of interpleader.
The claims here are, in fact, no more speculative than the claims
in that case.
See n 4,
supra.
[
Footnote 8]
See Chafee, Federal Interpleader Since the Act of 1936,
49 Yale L.J. 377, 383-393 (1940), and authorities collected,
id. at 383 n. 17; Nash, And Again Multiple Taxation?, 26
Geo.L.J. 288, 297 (1938).
[
Footnote 9]
There was no doubt that the dispute was. in fact. ideally suited
to resolution by means of federal interpleader. Professor Chafee,
upon whose work the Federal Interpleader Statute was largely based,
believed that conflicting state claims of domicile presented a
situation m which interpleader was "badly needed." Chafee,
supra, n 8, at 379. It
is, he observed, "highly unfair for both state governments to tell
the taxpayer,
You have to pay only one tax,' and then make him
pay twice." Id. at 384. He pointed out that the paradox of
inconsistent adjudications of a theoretically single domicile is
one created by our federal system of government:
"In a nation with a unified government, the situation in which
estates of decedents are here left remediless would be impossible.
Either only one agency would impose death taxes or else a single
court of review would determine domicile as between two local
taxing agencies. . . . Somewhere within that federal system, we
should be able to find remedies for the frictions which that system
creates."
Id. at 388. I believe such a remedy is now available.
See n 10,
infra.
[
Footnote 10]
I think this holding has been substantially undercut by
subsequent developments. In
Edelman v. Jordan,
415 U. S. 651, the
Court expressed an understanding of the Eleventh Amendment quite
different from that manifested in
Worcester County Trust Co. v.
Riley, 302 U. S. 292.
Thus, it would appear that an estate confronted with multiple tax
claims by two or more States could now bring an interpleader action
in a federal district court seeking declaratory and injunctive
relief against the tax officials of each State. I do not believe
that the Tax Injunction Act, 28 U.S.C. § 1341, would preclude such
a suit if it were clear that the taxing States would not afford the
estate a "plain, speedy and efficient remedy" for its claim that it
should not be subjected to
multiple taxes,
e.g.,
by recognizing an earlier determination of domicile by a sister
State.
[
Footnote 11]
At least one commentator so viewed the case when it was pending
before the Court:
"
Texas v. Florida may become the wedge to open the door
slammed in
Worcester County Trust Co. v. Riley. It is so
hard to believe that the Court will persist in its refusal to aid
the states in the difficulty, one seizes on the slightest
possibility to hope that there may yet come a solution."
Nash,
supra, n 8,
at 314.
[
Footnote 12]
At oral argument on Texas' original motion for leave to file a
bill of complaint in that case,
"the Court indicated that there was no justiciable controversy
unless the assets of the estate were insufficient to pay the tax
claims of all four of the states."
Tweed & Sargent, Death and Taxes are Certain -- But What of
Domicile, 53 Harv.L.Rev. 68, 75 (1939). This first complaint was
dismissed without prejudice.
Texas v. New York, 300 U.S.
642. It was upon Texas' amended complaint, plainly alleging "on
information and belief" that the assets were insufficient to meet
all claims, that the Court took jurisdiction in
Texas v.
Florida. See also Massachusetts v. Missouri,
308 U. S. 1,
308 U. S. 15.
[
Footnote 13]
In
Western Union Telegraph Co. v. Pennsylvania,
368 U. S. 71, the
Court held, by contrast, that a holder of tangible property is
denied due process by a state court judgment of escheat that does
not and cannot protect the holder from the escheat claim of another
State, and that the proper procedure was for the competing States
to invoke the original jurisdiction of this Court. Because the
Court held that the States could not constitutionally enforce their
escheat laws in their own courts, this Court was the only remaining
forum in which a State could escheat property that other States
claimed. The situation in which the present case arises is quite
different, since there is no constitutional impediment to both
California and Texas imposing death taxes upon the Hughes estate by
proceedings in their own courts.
[
Footnote 14]
See nn.
9 and |
9 and S. 601fn10|>10,
supra.
[
Footnote 15]
The injury would be the same whatever the source of each State's
claim upon the debtor. The closest analogue of the State's
complaint would seem to be the petition for a declaration of
involuntary bankruptcy -- a remedy created entirely by statute, not
by
"accepted doctrines of the common law or equity systems of
jurisprudence, which are guides to decision of cases within the
original jurisdiction of this Court."
Texas v. Florida, 306 U.S. at
306 U. S. 405.
See generally 1 W. Collier on Bankruptcy, �� 0.01-0.03
(1974). I am not certain that our duty to "exercise [the]
jurisdiction which is given,"
Cohens v.
Virginia, 6 Wheat. 264,
19 U. S. 404,
compels, or even empowers, us to create such a remedy for the
sovereign States. The status of unsatisfied creditor does not
necessarily create the kind of controversy between States that can
or should be resolved by means of adjudication under this Court's
original jurisdiction. This may, rather, be the kind of dispute
that is best resolved by the contending States through negotiation
or arbitration.
See New York v. New Jersey, 256 U.
S. 296,
256 U. S. 313;
Texas v. Florida, supra at
306 U. S. 428
(Frankfurter, J., dissenting). Tweed & Sargent,
supra,
n 12, at 77. Indeed many
States have adopted procedures for arbitration or compromise of
precisely the kind of dispute presented here.
See Uniform
Interstate Arbitration of Death Taxes Act, 8 U.L.A. 255 (1972); 4
CCH Inh.Est. & Gift Tax Rep. � 2,035 (1975).
MR. JUSTICE POWELL, concurring.
I join the excellent opinion of MR. JUSTICE STEWART, and write
simply to emphasize his conclusion that, in light of
Edelman v.
Jordan, 415 U. S. 651
(1974), this Court's decision in
Worcester County Trust Co. v.
Riley, 302 U. S. 292
(1937), no longer can be regarded as a bar against the use of
federal interpleader by estates threatened with double death
taxation because of possible inconsistent adjudications of
domicile.
As Professor Zechariah Chafee, the father of federal
statutory
Page 437 U. S. 616
interpleader, pointed out:
"It is our federal system which creates the possibility of
double taxation. Somewhere within that federal system, we should be
able to find remedies for the frictions which that system
creates."
Federal Interpleader Since the Act of 1936, 49 Yale L.J. 377,
388 (1940). The
Worcester County Court, much to Professor
Chafee's regret, 49 Yale L.J. at 388, held that the Eleventh
Amendment precluded resort to federal interpleader as a remedy for
the particularly unfair "friction" that can result from conflicting
adjudications of domicile in death taxation cases.
But as noted by MR. JUSTICE STEWART,
ante at
437 U. S.
608-609, n. 10,
Worcester County has been
effectively undercut by subsequent developments.
Edelman
made it clear that the Eleventh Amendment bars only suits "by
private parties seeking to impose a liability which must be paid
from public funds in the state treasury," 415 U.S. at
415 U. S. 663,
and not actions which may have
"fiscal consequences to state treasuries . . . [that are] the
necessary result of compliance with decrees which, by their terms,
[are] prospective in nature,"
id. at
415 U. S.
667-668, at least in a case such as this, where the very
controversy is a result of our federal system. An interpleader
action to prevent competing States' taxing officials from levying
death taxes on the basis of possible inconsistent adjudications of
domicile unquestionably would fall into the latter category.
Accordingly, it would appear that resort to federal interpleader no
longer is proscribed by the Eleventh Amendment in this
situation.
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