File No. 811.5124/16.]
The Assistant Attorney
General to the Secretary of
State.
Department of Justice,
Washington,
August 15, 1912.
Sir: Referring to your letters1 of February 7 and April 23,
1912, and subsequent correspondence, relating to certain inheritance
taxes sought to be collected by State officials in Iowa upon the shares
of the estates of Ane Margretha Andersen and Metta K. Peterson,
bequeathed to residents of Denmark, I have the honor to enclose for your
information and for an expression of your wishes as to the further
action, if any, to be taken with respect thereto, a copy of a letter of
the 8th instant from the United States Attorney for the Northern
District of Iowa, and with it a copy of the order of the District Court
of Mitchell County, Iowa, holding against the contention of the
Government in the case of the Andersen estate.
The United States Attorney is of the opinion that there is sufficient
merit in the contention of this Government to justify an appeal to the
Supreme Court of the State in the Andersen case.
There is also enclosed for your information a copy of a letter of the
10th instant from the United States Attorney for the above named
district, relating to the estate of Metta K. Peterson. This case
involved the same question as is involved in the estate of Mrs.
Andersen, except that the Peterson case has been fully settled and the
administrator discharged; the only step that can be availed of now is to
apply to the Executive Council for the refund of the tax.
In view of the fact of the final closing of the Peterson estate, the
beneficiaries having receipted in full for their shares, the United
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States Attorney thinks the
Government can not secure any legal standing with respect thereto.
Respectfully,
[Inclosure 1.]
United States Attorney for the Northern
District of Iowa to the Attorney
General.
Office of the United States
Attorney,
Storm Lake, Iowa,
August 8th, 1912.
Sir: Referring to the matter of the estate
of Anne [sic] Margretha Andersen, in the District Court in and for
Mitchell County in this District, I would say that on Feb. 17th you
sent me a memorandum of the Danish Legation addressed to the
Secretary of State and his letter to the Attorney General in regard
to an inheritance tax sought to be collected by the Treasurer of the
State of Iowa from the share of the estate of said decedent which
passed under the terms of the will to beneficiaries who are
residents and citizens of the Kingdom of Denmark. Acting under your
instructions I intervened in behalf of the United States in said
matter and set up the treaty of 1826 between the United States and
Denmark and thereupon the State Treasurer of Iowa demurred to said
petition of intervention and the demurrer was presented on extended
oral argument to the court.
I am just in receipt of an order from the court in which he holds
against the contention of the Government and that the terms of the
treaty with Denmark do not apply in this case. I enclose herewith a
copy of the findings of the court in said matter.
The only way that this can be reversed is by appeal to the Supreme
Court of the State of Iowa. I am of the opinion that there is
sufficient merit in the contention of the Government in this regard
to justify the appeal.
Please advise me of your further wishes in the matter.
Yours very truly,
[Sub-inclosure.]
Order of the District Court of Mitchell County,
Iowa, holding against the contention of the Government in the
case of the Andersen estate.
In the matter of the Estate of Anne [sic] Margrethe Andersen,
deceased.
This is a proceeding in probate to close the estate of the decedent,
Mrs. Anderson [sic]. She died testate in said county September 16,
1909, being a citizen and resident of the county at the time. Her
will was duly probated. The executor named therein died before the
estate was closed and C. L. Hansen was appointed administrator with
the will annexed. He has made his final report and asks to be
discharged upon making distribution as provided in the will. The
estate consists of a house and lots in Osage and certain personal
property. Decedent was a widow without direct issue at the time of
her death. The will provided for payment of debts and legal charges,
makes some small devises not involved in this action, and directs
the executor to sell the real estate and pay the remaining proceeds
of the real and personal estate to the sons and daughters of two
deceased sisters and a deceased brother, all of whom are citizens
and residents of Denmark. The executor died without selling the real
estate. The administrator with the will annexed made the sale under
order and approval of the Court. The Treasurer of State claims a
collateral inheritance tax of 20% on the net proceeds going to the
beneficiaries in Denmark because of the fact that they are
non-resident aliens, and the final report is made upon that basis.
They have filed written objections to the payment of more than a 5%
tax, and base their claim on Article Seven of the “Treaty of
Friendship, Commerce and Navigation” entered into by the United
States and Denmark in 1826. [Article seven is here quoted; see the
first paper of this correspondence.]
The United States Attorney for the Northern District of Iowa has
filed a petition of intervention on the part of the United States
making the same
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claims
under the treaty as made by the foreign beneficiaries in their
objections to the payment of more than a 5% collateral inheritance
tax. The Treasurer of State has demurred to the petition of
intervention and therein challenges the right of the United States
to make intervention because of want of sufficient legal interest in
the controversy. The conclusion which I have reached on the merits
of the controversy makes it unnecessary for me to decide whether or
not the United States has sufficient interest to authorize
intervention. But I have considered all the arguments and
authorities presented the same as I would if the right to intervene
were not questioned.
The language of Article Seven of the treaty in question is extremely
vague and uncertain. In such cases it is the law as stated by
Justice Field in Geofroy v. Riggs, 133 U. S.
258, 271; 33 L. Ed. 642, 646. “It is a general principal [sic] of
construction with respect to treaties that they shall be liberally
construed so as to carry out the apparent intention of the parties
to secure equality and reciprocity between them.” Applying this
principal [sic] of construction can it be reasonably said that the
parties to the treaty in question intended that Article Seven should
apply to the rights of citizens or subjects of one nation to inherit
or take by will from citizens or subjects of the other? Nothing is
said in the title or enacting clause of the treaty in reference to
inheritance Or succession. Nor is anything said on these subjects in
Article Seven except the words “either upon the inheritance of such
property, money, or effects or otherwise.” Standing alone this
clause gives color to the claims of the foreign beneficiaries. But
considered with the other language of the article and of the entire
treaty the construction favoring the claims of the objectors does
not seem warranted or reasonable. The clause quoted when considered
with all the rest of the treaty seems more reasonably to mean,
“whether the owner acquired such property, money or effects by
inheritance or otherwise.” All other portions of the article appear
to treat of the removal of property of the kind stated from the
territory of one of the contracting nations by the owner thereof
when he is a citizen or subject of the other nation and residing
outside the country from which the property is removed. The words
“removal” and “removed” are found just before and just after the
clause quoted. And that clause seems to be parenthetical in its
construction. The whole article seems to treat of the subject of
removal of property from the domain of one of the contracting
parties and not of the right of succession or inheritance. My
conclusion is that Article Seven of the treaty in question does not
apply to the controversy herein.
The objections of the beneficiaries under the will of the decedent to
the final report of the administrator with the will annexed are
overruled, to which each of them excepts. The demurrer of the
Treasurer of State to the petition of intervention of the United
States is sustained. The United States excepts. It declines the
[sic] plead further and gives notice that it elects to stand upon
the ruling on the demurrer.
The final report of the Administrator with the will annexed is
approved. He is directed to pay to the Treasurer of State a
collateral inheritance tax of 20% of the portions of the estate
going to the non-resident alien beneficiaries under the will of the
decedent and make distribution of the remainder thereof to them as
provided in the will. All parties except.
Dated Osage, Iowa, August —, 1912.
--,
Judge.
[Inclosure 2.]
United States Attorney for the Northern
District of Iowa to the Attorney
General.
Office of the United States
Attorney,
Storm Lake, Iowa,
August 10, 1912.
Sir: I write you regarding the tax imposed
by the State of Iowa on the estate of Meta K. Peterson, formerly a
resident of Le Mars, Plymouth County, Iowa.
This case involved the same question as the matter of the estate of
Anne Margrethe Andersen in Mitchell County in this District, except
that the Peterson case has the further complication of the estate
having been fully settled
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and the administrator discharged and therefore, the only steps that
can be taken in the matter is by an application to the Executive
Council for a refund of the tax.
I wrote you yesterday regarding the decision of Judge Clyde in the
State court in the Anne Margrethe Andersen case in which he
construes the treaty of 1826 adversely to the contention of the
Government and holds that the estate is subject to the tax of 20 per
cent. If this decision stands, it would control the Peterson
case.
I have withheld instituting any proceedings or making an application
to the Executive Council pending the decision of this case in
Mitchell County and in view of that decision, I submit the matter to
you for further instructions before proceeding further.
I am very doubtful if we can secure any legal standing in any event
in the Peterson case, for if the Executive Council would refuse to
refund, I do not think there would be any right of appeal to any
court, and the estate having been fully closed with notice to the
alien beneficiaries and they having receipted in full for their
share in the estate, I am of the opinion that they are estopped to
maintain any action to recover for this tax and if they are out of
court, it will necessarily follow that the Government could obtain
no standing in the case.
Will you kindly advise me further in the matter and oblige,
Yours, very truly,
