California v. Texas
1982 U.S. LEXIS 120, 72 L. Ed. 2d 755, 102 S. Ct. 2335 (1982)
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Rule of Law:
The Supreme Court may exercise its original jurisdiction over a dispute between two states when they assert mutually exclusive claims to levy death taxes based on a decedent's domicile, and the combined claims threaten to exceed the value of the estate, leaving no other adequate judicial forum to resolve the conflict.
Facts:
- Upon his death, wealthy magnate Howard Hughes left an estate without a clearly established state of domicile.
- The state of California and the state of Texas both claimed that Hughes was a domiciliary of their respective states at the time of his death.
- Under the laws of both states, an individual can have only one domicile for death tax purposes, making the states' claims to tax Hughes's intangible property mutually exclusive.
- California alleged that if its claim were successful, the combined effective state and federal death taxes would amount to 101% of the estate's value.
- This potential tax liability created a risk that the estate would be insufficient to satisfy all claims, thereby jeopardizing one of the states' ability to collect its taxes.
Procedural Posture:
- California first moved for leave to file a complaint against Texas under the Supreme Court's original jurisdiction in 1977, but the motion was denied.
- Following a suggestion from several Justices in the 1977 denial, the administrator of the Hughes estate filed a statutory interpleader action in a Federal District Court to determine Hughes's domicile.
- The U.S. Court of Appeals for the Fifth Circuit held that the Federal Interpleader Act provided a jurisdictional basis for the action.
- California's taxing officials petitioned the U.S. Supreme Court for a writ of certiorari to review the Fifth Circuit's decision in a case docketed as Cory v. White.
- At the same time, California renewed its motion for leave to file a complaint against Texas directly in the U.S. Supreme Court.
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Issue:
Does the Supreme Court have, and should it exercise, original jurisdiction over a dispute where California and Texas assert competing, mutually exclusive claims to tax the estate of Howard Hughes based on his domicile, particularly when the combined tax claims could exceed the estate's total value and no other federal forum is available?
Opinions:
Majority - Per Curiam
Yes. The Supreme Court has and will exercise original jurisdiction because the dispute constitutes a 'controversy' between two states. Citing the precedent set in Texas v. Florida, the Court reasoned that when states assert rival and mutually exclusive claims for death taxes that risk exceeding the total value of an estate, a justiciable controversy exists. The Court found it appropriate to exercise its jurisdiction now because its parallel decision in Cory v. White closed the only other potential avenue for resolution—a federal interpleader action—making the Supreme Court the only available forum to provide a binding determination and prevent the substantial risk of loss to the estate and the states.
Dissenting - Justice Powell
No. The Court should not exercise jurisdiction because a ripe 'case or controversy' between the states does not yet exist. The dissent argued that under Worcester County Trust Co. v. Riley, there is no constitutional bar to both states independently determining Hughes's domicile and imposing a tax. A true controversy between the states would only arise if both states obtained judgments against the estate and the estate was then proven insufficient to satisfy both claims. This sequence of events is currently too speculative to meet the requirements of Article III, and the majority's reliance on the 'wrongly decided' Texas v. Florida precedent is misplaced.
Analysis:
This decision reaffirms the precedent of Texas v. Florida, solidifying the Supreme Court's role as the essential forum for resolving interstate disputes over a decedent's domicile when potential tax claims threaten an estate's solvency. By explicitly linking its decision to the unavailability of an alternative federal forum (as decided in Cory v. White), the Court clarifies that its original jurisdiction in such matters acts as a crucial last resort. This ruling ensures a single, binding forum exists to prevent a 'race to judgment' between states and the potential for unfair double taxation or depletion of an estate, promoting a uniform resolution in high-stakes, multi-state tax disputes.
