The Virginia Decision
How far practice had departed from the equitable principle that all remedy in the State Courts must be exhausted before complainants might appeal their case to the United States Courts, is emphasized by the impression amounting almost to a sensation, produced by the decision, on November 30th last by the Supreme Court covering the Virginia railway rate case, wherein an injunction had first been obtained by the corporation from a lower Federal Court, preventing the enforcement of the two-cent rate prescribed by the Railway Commission of the State. This restraining order was passed May 14, 1907, and the effect thereof was to prevent the exercise of the Railway Commission’s legitimate control over the passenger traffic of their State until now. The rebuke to Federal Judge Pritchard, who granted the injunction, in the reversal of his findings in favor of the railroad comes from a source which the American people have desired to esteem as their highest source of justice, and will have admirable effect. Not only will it do much to allay the irritation and the distrust which has been growing for many years against this tribunal, but it will have most salutary effect upon insolent Federal Judges and ruthless corporations. The injunction has been their sword and buckler. Ignoring the State Courts, they have rushed to obtain injunctions against the enforcement of any measure they happened to dislike. Armed with the premature mandate of a Federal officer, they have defied public opinion and the sovereign authority which created and nurtured them. A firm check on the abuse of the injunction, had become a crying necessity, if the public were to respect wise injunctions and uphold the law.
The decision has been hailed with what could honestly be called “pleased surprise”—so many disappointments had led to the belief that corporate interests were obliged to triumph. Wide-spread approval has been accorded the ruling. In a few instances criticism has been proffered, to the effect that the points over which the case originally occurred are unsolved and that the question of railroad regulation is as misty as before. These are matters, however, which do not touch the principle of State’s redress first, which was universal before the misconstruction of the 14th Amendment made possible such usurpation of authority as the one for which Judge Pritchard has been called down.
Other interesting court decisions have taken place within a short period. The New Jersey Court of Appeals, for instance, has considered a knotty problem relative to its collateral inheritance law. Philo Miles, a British subject, died in London, leaving a considerable amount of stock in a New Jersey corporation and the lower courts held that the tax could be levied upon same. The Appellate Court negatived this conclusion on the ground that personal property which includes stocks and bonds must follow the situs of the owner and be taxed “there and there only.” They held that if every State could levy an inheritance tax upon the full estate of the deceased, his personal property being returned in the inventory of the executor or administrator, the estate of the deceased could be taxed as often as there were States in which he chanced to have personal property at the time of his death. This would, of course, be inconceivable.
It would be helpful to know just how England, which has a National and effective inheritance tax, will manage with the property held in New Jersey by the late Mr. Miles. Much of the wealth of her citizens is represented by stocks in American corporations, mortgages upon American property and like personal effects. Possibly the heirs are more scrupulous in returning such property for taxation than are our own rich men, who think no wrong of sending out of the State all personalty for long enough to swear tax statements that are true in the letter, but utterly false in fact. To evade municipal taxation, they do not hesitate to take their securities outside the corporate limits for a day or so. The owner of a home or farm may not escape bearing the burdens of government, but those who derive annual fortunes from dividends upon “personal property” go scatheless.
A national inheritance tax, with stringent provisions to enforce it, would go a long way toward evening things up.
A SOCIAL CALL
New York World